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National Economic Policy Simulations with Global Interdependencies: A Sensitivity Analysis for Germany

Author

Listed:
  • Bernd Meyer
  • Christian Lutz
  • Peter Schnur
  • Gerd Zika

Abstract

Policy simulations for national economies with econometric models, in general, are done using a standalone national model with exogenous export values and import prices. In a globalised world, such an exercise is critical, since the policy in question may change the export prices and the import volumes of the particular country and induce via international trade a change of the economic activities of the global economy and a feedback to the export values and import prices of the particular country. This paper presents a sensitivity analysis for Germany comparing the impacts of a shock on investment in a standalone simulation using the multisector model INFORGE with the results, which occur, if the same model is linked to the global multicountry/multisector model GINFORS endogenising Germany-super-`s export values and import prices. The results are striking: the effect on real GDP is 50% higher in the global simulation than in the standalone case. Because of the specialisation in trade the differences on the sector level are even stronger.

Suggested Citation

  • Bernd Meyer & Christian Lutz & Peter Schnur & Gerd Zika, 2007. "National Economic Policy Simulations with Global Interdependencies: A Sensitivity Analysis for Germany," Economic Systems Research, Taylor & Francis Journals, vol. 19(1), pages 37-55.
    • Handle: RePEc:taf:ecsysr:v:19:y:2007:i:1:p:37-55
    DOI: 10.1080/09535310601164765
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    References listed on IDEAS

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    1. Hertel, Thomas, 1997. "Global Trade Analysis: Modeling and applications," GTAP Books, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University, number 7685, December.
    2. Hans-Werner Sinn, 2005. "Bazaar Economy GermanyWorld Champion Exporter or Laggard?," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 58(06), pages 03-42, March.
    3. Lutz, Christian & Meyer, Bernd & Nathani, Carsten & Schleich, Joachim, 2005. "Endogenous technological change and emissions: the case of the German steel industry," Energy Policy, Elsevier, vol. 33(9), pages 1143-1154, June.
    4. Leontief, Wassily, 1977. "The future of the world economy+," Socio-Economic Planning Sciences, Elsevier, vol. 11(3), pages 171-182.
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    More about this item

    Keywords

    Policy simulation; econometric models; global modelling;
    All these keywords.

    JEL classification:

    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • E17 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Forecasting and Simulation: Models and Applications
    • E27 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Forecasting and Simulation: Models and Applications
    • E37 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Forecasting and Simulation: Models and Applications
    • F17 - International Economics - - Trade - - - Trade Forecasting and Simulation
    • F47 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Forecasting and Simulation: Models and Applications

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