We introduce a new suite of macroeconomic models that extend and complement the Debt, Investment, and Growth (DIG) model widely used at the IMF since 2012. The new DIG-Labor models feature segmented labor markets, efficiency wages and open unemployment, and an informal non-agricultural sector....

Understanding how public investment affects economic performance in highly indebted low-income countries is crucial in order to implement effective fiscal policies for adjustment with growth. In this paper we provide an empirical analysis to investigate the relationship between public...