BRIEF

The Long Term Growth Model

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About the Model

The Long Term Growth Model (LTGM) is an Excel-based tool to analyze long-term growth scenarios building on the celebrated Solow-Swan Growth Model. The tool can also be used to assess the implications of growth (and changes in inequality) for poverty rates. The focus of the tool is on simplicity, transparency and ease-of-use: there are no macros, and the very low data requirements mean the tool can be applied in almost any country. The tool is useful for planning/vision documents and country reports, but is not designed for short-term forecasting. The building blocks of growth are savings, investment and productivity, but the model also analyzes human capital, demographics, the external sector (external debt, FDI, CAB) and labor force participation by gender.

LTGM Files

Latest version: LTGM v4.21 (Excel file)

Model description (pdf file)

Presentation Slides  (pdf file)

Instructions and Worked Example Simulations (pdf file)

Note that example simulations are purely illustrative and do not necessarily reflect the views of the World Bank.

The LTGM is regularly updated so check back for new versions. Last updated: 12 September 2018 

Public Capital Extension (LTGM-PC)

The LTGM-PC is an extension of the standard LTGM (above) which separates the total capital stock into public and private portions, and adjusts the public component for quality. The LTGM-PC spreadsheet allows users to analyze the effect of an increase in public or private investment or the quality of public investment on economic growth. The LTGM-PC spreadsheet is similar to the standard LTGM: transparent (no macros) and easy-to-use, and with all relevant data preloaded for almost all countries. The LTGM-PC also includes a new cardinal Infrastructure Efficiency Index (IEI), which measures the quality of public capital. In the model, public investment generates a larger boost to growth if existing stocks of public capital are low, or if public capital is particularly important in the production function. The LTGM-PC is described in the working paper “Assessing the Effect of Public Capital on Growth: An Extension of the World Bank Long-Term Growth Model” by Devadas and Pennings. The Excel tool, working paper, and an appendix to the working paper are downloadable:

LTGM-PC latest version: LTGM-PC v4.21 (Excel file)

LTGM-PC Working paper | Appendix (pdf) 


Examples

Some examples of publicly available reports or working papers that used the LTGM (including early variants):

The LTGM is the product of a collaboration between the Development Research Group’s Macroeconomics and Growth Team and the Macroeconomics, Trade and Investment Global Practice.


Experts

Steven Pennings

Economist

Norman Loayza

Lead Economist