DIGNAD toolkit with Cian Ruane and Azar Sultanov (2023)
The DIGNAD (Debt-Investment-Growth and Natural Disasters) toolkit builds on the extension of the Debt, Investment and Growth model of Buffie et al. (2012) to natural disasters following Marto, Papageorgiou and Klyuev (2018), allowing the user to run the model from an Excel interface. The model captures the challenges of closing infrastructure gaps in developing countries that frequently face natural disasters. In addition to permanent damages to public and private capital, natural disasters cause temporary losses of productivity, inefficiencies during the reconstruction process, and damages to the sovereign's creditworthiness.
The toolkit enables users to evaluate debt sustainability risks following natural disasters amidst the need to rebuild public infrastructure through the lens of a rich general equilibrium structure. The model can also be used to analyze the effects of ex-ante policies, such as building adaptation infrastructure, increasing fiscal buffers, or improving public investment efficiency. The model can be calibrated using country-specific macroeconomic indicators, and users can additionally calibrate the size and timing of natural disasters, and the various mechanisms through which they affect macroeconomic aggregates. The toolkit will therefore be of use to economists and policymakers looking to develop tailored analysis of the macro-fiscal impacts of natural disasters and investments in resilience.
Download from IMF: toolkit and user manual