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The OECD's New Global Model

Author

Listed:
  • Karine Hervé

    (OECD)

  • Nigel Pain

    (OECD)

  • Pete Richardson

    (OECD)

  • Franck Sédillot

    (OECD)

  • Pierre-Olivier Beffy

    (OECD)

Abstract

This paper provides a summary of the OECD’s new global macroeconometric model, including an overview of model structure and a selection of simulations illustrating its main properties. Compared with its predecessors, the new model is more compact and regionally aggregated, but gives more weight to the focus of policy interests in global trade and financial linkages. The country model structures typically combine short-term Keynesian-type dynamics with a consistent long-run neo-classical supply-side. While retaining a conventional treatment of international trade and payments linkages, the model has a greater degree of stock-flow consistency, with explicit modelling of domestic and international assets, liabilities and associated income streams. Account is also taken of the influence of financial and housing market developments on asset valuation and domestic expenditures via house and equity prices, interest rates and exchange rates. As a result, the model gives more prominence to wealth and wealth effects in determining longer-term outcomes and the role of asset prices in the transmission of international shocks both to goods and financial markets. Le nouveau modèle global de l'OCDE Ce document de travail présente un résumé du nouveau modèle macro-économétrique de l’OCDE, incluant une vue d’ensemble de la structure du modèle et une sélection de simulations qui illustrent ses principales propriétés. Comparé aux modèles antérieurs, le nouveau modèle est plus compact et agrégé par région, mais donne plus de poids aux politiques économiques portant sur les interactions entre le commerce mondial et les marchés financiers. Les structures du modèle par pays combinent des dynamiques de court terme de type Keynésien avec un côté de l’offre à long terme néo-classique consistant. Alors qu’il conserve un traitement conventionnel des interactions enter le commerce international et les secteurs financiers, le modèle a un meilleur degré de consistance des stocks et des flux, avec une modélisation explicite des actifs domestiques et internationaux et des flux des actions et des revenus qui en découlent. On tient compte aussi de l’influence du développement des marchés financier et immobilier sur les valorisations d’actifs et les dépenses domestiques à travers les prix des maisons et des titres, des taux d’intérêt et des taux de change. En conséquence, le modèle donne plus d’importance à la richesse et aux effets de richesse dans les résultats à long terme des simulations, ainsi qu’au rôle du prix des actifs dans la transmission des chocs internationaux entre les biens et les marchés financiers.

Suggested Citation

  • Karine Hervé & Nigel Pain & Pete Richardson & Franck Sédillot & Pierre-Olivier Beffy, 2010. "The OECD's New Global Model," OECD Economics Department Working Papers 768, OECD Publishing.
  • Handle: RePEc:oec:ecoaaa:768-en
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    File URL: http://dx.doi.org/10.1787/5kmftp85kr8p-en
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    References listed on IDEAS

    as
    1. Karine Hervé & Isabell Koske & Nigel Pain & Franck Sédillot, 2008. "The macroeconomic policy challenges of continued globalisation," OECD Journal: Economic Studies, OECD Publishing, vol. 2008(1), pages 1-51.
    2. Pete Richardson & Laurence Boone & Claude Giorno & Mara Meacci & David Rae & David Turner, 2000. "The Concept, Policy Use and Measurement of Structural Unemployment: Estimating a Time Varying NAIRU Across 21 OECD Countries," OECD Economics Department Working Papers 250, OECD Publishing.
    3. Pierre-Olivier Beffy & Patrice Ollivaud & Pete Richardson & Franck Sédillot, 2006. "New OECD Methods for Supply-side and Medium-term Assessments: A Capital Services Approach," OECD Economics Department Working Papers 482, OECD Publishing.
    4. Keiko Murata & Dave Turner & David Rae & Laurence Le Fouler, 2000. "Modelling Manufacturing Export Volumes Equations: A System Estimation Approach," OECD Economics Department Working Papers 235, OECD Publishing.
    5. John F. Helliwell & Peter Sturm & Peter Jarrett & Gérard Salou, 1985. "Aggregate Supply in INTERLINK: Model Specification and Empirical Results," OECD Economics Department Working Papers 26, OECD Publishing.
    6. Christian Gianella & Isabell Koske & Elena Rusticelli & Olivier Chatal, 2008. "What Drives the NAIRU? Evidence from a Panel of OECD Countries," OECD Economics Department Working Papers 649, OECD Publishing.
    7. Dave Turner & Pete Richardson & Sylvie Rauffet, 1996. "Modelling the Supply Side of the Seven Major OECD Economies," OECD Economics Department Working Papers 167, OECD Publishing.
    8. Nigel Pain & Annabelle Mourougane & Franck Sédillot & Laurence Le Fouler, 2005. "The New OECD International Trade Model," OECD Economics Department Working Papers 440, OECD Publishing.
    9. Claude Giorno & Pete Richardson & Deborah Roseveare & Paul van den Noord, 1995. "Estimating Potential Output, Output Gaps and Structural Budget Balances," OECD Economics Department Working Papers 152, OECD Publishing.
    10. Thomas Dalsgaard & Christophe André & Pete Richardson, 2001. "Standard Shocks in the OECD Interlink Model," OECD Economics Department Working Papers 306, OECD Publishing.
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    Cited by:

    1. Golinelli, Roberto & Parigi, Giuseppe, 2014. "Tracking world trade and GDP in real time," International Journal of Forecasting, Elsevier, vol. 30(4), pages 847-862.
    2. Fabio Bacchini & Cristina Brandimarte & Piero Crivelli & Roberta De Santis & Marco Fioramanti & Alessandro Girardi & Roberto Golinelli & Cecilia Jona-Lasinio & Massimo Mancini & Carmine Pappalardo & D, 2013. "Building the core of the Istat system of models for forecasting the Italian economy: MeMo-It," Rivista di statistica ufficiale, ISTAT - Italian National Institute of Statistics - (Rome, ITALY), vol. 15(1), pages 17-45.
    3. Bernardina Algieri, 2011. "Modelling export equations using an unobserved component model: the case of the Euro Area and its competitors," Empirical Economics, Springer, vol. 41(3), pages 593-637, December.
    4. Fioramanti, Marco & Vicarelli, Claudio, 2011. "The New Stability and Growth Pact: Primum non nocere," CEPS Papers 4370, Centre for European Policy Studies.
    5. Amber Fatima & Abdul Waheed, 2014. "Economic uncertainty and growth performance: a macroeconomic modeling analysis for Pakistan," Quality & Quantity: International Journal of Methodology, Springer, vol. 48(3), pages 1361-1387, May.
    6. Akanbi, Olusegun Ayodele, 2013. "Macroeconomic effects of fiscal policy changes: A case of South Africa," Economic Modelling, Elsevier, vol. 35(C), pages 771-785.
    7. Agnieszka Domańska, 2013. "References to the Mundell-Fleming Model Found in New Models and the Evolution of Approaches in Analyzing the International Effects of Macroeconomic Policy," Ekonomia journal, Faculty of Economic Sciences, University of Warsaw, vol. 32.

    More about this item

    Keywords

    econometric modelling; Global; global; macroeconomic; macroéconomique; modèle économétrique; simulation; simulation;

    JEL classification:

    • E17 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Forecasting and Simulation: Models and Applications
    • F01 - International Economics - - General - - - Global Outlook
    • F47 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Forecasting and Simulation: Models and Applications

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