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Modelling the world economy at the 2050 horizon

  • 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, CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS)

  • 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, CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS, Department of Economics - European University Institute)

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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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
Date of revision:
Publication status: Published in Economics of Transition, Wiley-Blackwell, 2013, 21 (4), pp.617-654. <10.1111/ecot.12023>
Handle: RePEc:hal:pseose:hal-00975545
DOI: 10.1111/ecot.12023
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