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Germany’s Growth Prospects against the Backdrop of Demographic Change

Author

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  • Breuer Sebastian

    (Sachverständigenrat zur Begutachtung der gesamtwirtschaftlichen Entwicklung, Gustav-Stresemann-Ring 11, Wiesbaden65189, Germany)

  • Elstner Steffen

    (RWI – Leibniz – Institut für Wirtschaftsforschung, Essen, Germany)

Abstract

This paper shows how the German Council of Economic Experts (GCEE) determines Germany’s potential output, and compares the results with those of the European Commission. The approach of the European Commission is a natural benchmark, as it provides the basis for the deficit and debt rules of the European Union. In comparison with the European Commission’s method, the GCEE’s method places greater emphasis on demographic factors in estimating labour input. Additionally, both approaches differ regarding how they estimate the structural unemployment rate and total factor productivity. Finally, this paper discusses the limitations of, and the different options for estimating potential output.

Suggested Citation

  • Breuer Sebastian & Elstner Steffen, 2020. "Germany’s Growth Prospects against the Backdrop of Demographic Change," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 240(5), pages 565-605, October.
    • Handle: RePEc:jns:jbstat:v:240:y:2020:i:5:p:565-605:n:2
    DOI: 10.1515/jbnst-2018-0094
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    2. Feld Lars P. & Nöh Lukas & Reuter Wolf Heinrich & Yeter Mustafa, 2021. "Von der Corona-bedingten Schuldenaufnahme zur Wiedereinhaltung der Schuldenbremse," Perspektiven der Wirtschaftspolitik, De Gruyter, vol. 22(4), pages 330-349, November.

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    More about this item

    Keywords

    potential output growth; output gap; demographic change;
    All these keywords.

    JEL classification:

    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • E17 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Forecasting and Simulation: Models and Applications
    • E37 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Forecasting and Simulation: Models and Applications

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