Updating Investment Forecasts with Macro Consistency

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Peer Reviewed icon Peer Reviewed
Date issued
May 2023
Subject
Investment;
Public Investment;
Gross Domestic Product;
Public Finance;
Economy;
Medium-Term Fiscal Framework;
Economic Development;
Public Expenditure;
GDP Growth;
Fiscal Sustainability;
Private Investment
JEL code
H50 - National Government Expenditures and Related Policies: General;
H68 - Forecasts of Budgets, Deficits, and Debt;
E17 - Forecasting and Simulation: Models and Applications
Category
Technical Notes
This technical note presents a model to evaluate the costs and benefits of plans to scale up public investment. It creates a theoretical framework that considers the positive effects of investment on growth and, in turn, the impact it can have on government fiscal accounts, particularly debt service. This note is accompanied by a template that implements the proposed methodology, which the author hopes will be useful for the work of country economists at the Inter-American Development Bank.