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Long-Run GDP Growth Framework and Scenarios for the World Economy

Listed author(s):
  • Romain Duval


  • Christine de la Maisonneuve


This paper develops and applies a simple “conditional growth” framework to make long-term GDP projections for the world economy, taking as a starting point recent empirical evidence about the importance of total factor productivity and human capital in explaining current cross-country disparities in GDP per capita levels. Other distinct features of the projection framework include human capital projections by cohorts and implicit allowance for the impact of ageing and potential labour market and pension reforms on future growth in employment levels. In the baseline projection, world GDP would grow in PPP terms by about 3 ¾ % per year on average over the period 2005-2050. When expressed in constant market exchange rates, taking into account future Balassa-Samuelson effects, this projection falls roughly in the middle of the range of long-run scenarios recently developed in the context of greenhouse gas emission projections. The sensitivity of the projection to total factor productivity and population growth assumptions is significant, however, and compounds with deeper sources of uncertainty such as model and parameter uncertainty. Un cadre d'analyse et des scénarios de long terme pour l'économie mondiale Cet article développe et applique un cadre d’analyse simple fondé sur la « convergence conditionnelle » pour produire des projections de long terme du PIB mondial, prenant pour point de départ l’évidence empirique récente concernant l’importance de la productivité multifactorielle et du capital humain dans l’explication des disparités actuelles de niveaux de PIB par habitant entre pays. Les autres traits distinctifs du cadre d’analyse incluent des projections de capital humain par cohortes, ainsi que la prise en compte implicite de l’impact du vieillissement et des réformes du marché du travail et des régimes de retraite sur la croissance future de l’emploi. Dans la projection centrale, le PIB mondial exprimé en PPA croîtrait à un rythme annuel d’environ 3 ¾ % en moyenne au cours de la période 2006-2050. Exprimé en taux de change de marché constants, en prenant en compte les effets Balassa-Samuelson futurs, cette projection se situe dans le milieu de la fourchette des scénarios de long terme développés récemment dans le contexte des projections d’émissions de gaz à effet de serre. Cependant, la sensibilité de la projection aux hypothèses de taux de croissance de la productivité multifactorielle et de la population est forte, et se combine à des sources d’incertitude plus profondes relatives au modèle et à la valeur des paramètres.

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Paper provided by OECD Publishing in its series OECD Economics Department Working Papers with number 663.

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Date of creation: 03 Feb 2009
Handle: RePEc:oec:ecoaaa:663-en
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