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Modelling the world economy at the 2050 horizon

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  • Jean Fouré

    (CEPII - Centre d'Etudes Prospectives et d'Informations Internationales - Centre d'analyse stratégique)

  • Agnès Bénassy-Quéré

    (CEPII - Centre d'Etudes Prospectives et d'Informations Internationales - Centre d'analyse stratégique, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris, CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris I - Panthéon-Sorbonne)

  • Lionel Fontagné

    ()
    (CEPII - Centre d'Etudes Prospectives et d'Informations Internationales - Centre d'analyse stratégique, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris, CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris I - Panthéon-Sorbonne, Department of Economics - European University Institute)

Abstract

Economic analysis is increasingly addressing long-term issues (such as global warming) that require a dynamic baseline for the world economy. In this article, we develop a three-factor (capital, energy, labour) macroeconometric (MaGE - Macroeconometrics of the Global Economy) model, and project growth for 147 countries to 2050. We improve on the literature by the following: (i) accounting for the energy constraint through dynamic modelling of energy productivity, (ii) modelling female participation rates consistent with education catch-up, (iii) departing from the assumptions of either a closed economy or full capital mobility (by applying a Feldstein-Horioka type relationship between saving and investment rates), and (iv) offering a fully consistent treatment of the Balassa-Samuelson effect. These innovative features have a sizeable impact on projected GDP.

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Bibliographic Info

Paper provided by HAL in its series PSE - Labex "OSE-Ouvrir la Science Economique" with number hal-00975545.

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Date of creation: 16 Aug 2013
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Publication status: Published, Economics of Transition, 2013, 21, 4, 617-654
Handle: RePEc:hal:pseose:hal-00975545

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Keywords: GDP projections; long run; global economy;

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Cited by:
  1. Lionel Fontagné & Jean Fouré & Maria Priscila Ramos, 2013. "MIRAGE-e: A General Equilibrium Long-term Path of the World Economy," Working Papers 2013-39, CEPII research center.
  2. Fouré, Jean & Guimbard, Houssein & Monjon, Stéphanie, 2013. "Border Carbon Ajustment in Europe and Trade Retaliation: What would be the Cost for European Union?," Economics Papers from University Paris Dauphine 123456789/13008, Paris Dauphine University.

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