Public Debt Dynamics under Uncertainty from edX

This online course, presented jointly by the Institute for Capacity Development and the Fiscal Affairs Department, provides an overview of how to assess public debt dynamics under uncertainty. That is, the course discusses how to think about public debt projections when we acknowledge uncertainty about the key variables that underly debt projections (GDP growth, interest and exchange rates, and primary balances).

This one-module course will allow you to produce and interpret fan charts (a graphical tool used to describe uncertainty about the evolution of a variable over time). The course will also present the concepts of maximum debt limit (level of debt surpassing which could have significant negative consequences for the economy) and safe debt (a level of debt sufficiently below the debt limit to provide a comfortable and prudent buffer). The course explains how to use fan charts to derive a safe level of debt and how to assess fiscal risks.

What you'll learn

Upon completion of this course, participants should be able to:

Explain what a fan chart of debt is.
Interpret a fan chart to identify risks to public debt dynamics.
Understand how to produce fan charts through simple Monte Carlo simulations.
Understand how to produce fan charts using VAR models and fiscal reaction functions.
Understand the concept of safe debt and maximum debt limit.
Evaluate debt dynamics under uncertainty.

What's inside

Learning objectives

Explain what a fan chart of debt is.
Interpret a fan chart to identify risks to public debt dynamics.
Understand how to produce fan charts through simple monte carlo simulations.

Understand how to produce fan charts using var models and fiscal reaction functions.
Understand the concept of safe debt and maximum debt limit.
Evaluate debt dynamics under uncertainty.

Explain what a fan chart of debt is.
Interpret a fan chart to identify risks to public debt dynamics.
Understand how to produce fan charts through simple monte carlo simulations.
Understand how to produce fan charts using var models and fiscal reaction functions.
Understand the concept of safe debt and maximum debt limit.
Evaluate debt dynamics under uncertainty.

Good to know

Know what's good

, what to watch for

, and possible dealbreakers

Teaches learners to make informed decisions regarding the dynamics of public debt under uncertainty

Presents real-world examples to help students contextualize their learning

Reviews summary

Public debt simulation modeling

According to students, Public Debt Dynamics under Uncertainty introduces public debt simulation concepts with a good balance of intuition and technical precision. Vector Auto-Regressive Models and fiscal reaction functions are used to explain fan charts in order to derive normative statements on debt limits. The course is also recommended for beginners.

Availability and helpfulness of the instructor

"I occasionally found some of the material unclear. Fortunately, the instructor was available to clarify the points."

Accessible for beginners

"Overall, I learned a lot from this course and would recommend this course to anyone who wants to have an understanding on debt dynamics and simulation."

"Especially, it is highly recommended for beginners without a background beyond elementary statistics."

Balance of intuition and technical precision

"Overall, this was a very good course introducing simulations on public debt. It made the right balance between intuition and technical precisions to help beginners understand the results and implications of fan charts."

Coverage of key topics related to public debt dynamics

"Specifically, the course thought what a fan chart is, by introducing Vector Auto-Regressive Model and fiscal reaction function."

"The discussion further developed on how to derive normative statements on debt limits using a fan chart."

Activities

Be better prepared before your course. Deepen your understanding during and after it. Supplement your coursework and achieve mastery of the topics covered in Public Debt Dynamics under Uncertainty with these activities:

Review Statistics

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Reviewing statistics will lay a foundation for understanding concepts of public debt dynamics.

Browse courses on Statistics

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Identify key statistical concepts: mean, median, standard deviation, hypothesis testing
Practice using statistical software

Public Debt Management: Theory and Practice

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This book provides a comprehensive overview of public debt management, including the concepts covered in the course.

View Inequality and Fiscal Policy on Amazon

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Read the book's chapters on debt dynamics and risk management
Take notes and summarize the key concepts

Discuss Fan Chart Concepts

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Discussing fan chart concepts with peers consolidates your understanding and fosters a collaborative learning environment.

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Form a study group or join an online forum
Share your interpretations of fan charts
Discuss how fan charts can be used to identify risks

Five other activities

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Show all eight activities

Monte Carlo Simulations

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Conducting Monte Carlo simulations will enable you to visualize how uncertain variables impact public debt projections.

Browse courses on Monte Carlo simulations

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Learn how to set up and run Monte Carlo simulations
Use Python or R to code simulations
Apply simulations to debt projections

Attend a Public Debt Management Workshop

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Attending a public debt management workshop provides an interactive and engaging learning experience.

Browse courses on Public Debt Management

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Find a workshop that aligns with your interests
Register for the workshop
Attend the workshop and actively participate

Learn Econometrics Techniques

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Econometrics techniques help form the basis of the course's concepts, and delving into them can deepen your understanding.

Browse courses on Econometrics

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Find online tutorials on VAR models
Follow a course on fiscal reaction functions
Practice applying econometrics to real-world data

Debt Sustainability Analysis

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Conducting a debt sustainability analysis will give you hands-on experience in applying the concepts learned in the course to a real-world scenario.

Browse courses on Debt Sustainability

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Gather data on a country's public debt
Create a model to project future debt dynamics
Evaluate the sustainability of the country's debt
Write a report summarizing your findings

Develop a Webinar on Public Debt

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Creating a webinar on public debt will force you to synthesize the concepts and develop a clear understanding of the topic.

Browse courses on Public Debt

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Choose a specific topic within public debt
Research the topic and prepare a presentation
Deliver the webinar to an audience

Career center

Learners who complete Public Debt Dynamics under Uncertainty will develop knowledge and skills that may be useful to these careers:

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