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The Larger Europe : Technological Convergence and Labour Migrations

Listed author(s):
  • Michel Aglietta

    (Centre d'Etudes Prospectives et d'Informations Internationales)

  • Vladimir Borgy

    (Centre de recherche de la Banque de France)

  • Jean Chateau

    (UFR Mathématique et informatique)

  • Michel Juillard

    (Bases, Corpus, Langage)

  • Jacques Le Cacheux

    (Observatoire français des conjonctures économiques)

  • Vincent Touze

    (Observatoire français des conjonctures économiques)

  • Gilles Le Garrec

    (Observatoire français des conjonctures économiques)

We investigate the long-run growth of Europe in the world economy. The research covers the first half of the XXI° century. The basic trends that will shape the growth regime in the global economy are the demographic transition and the diffusion of technological progress. We use the framework of INGENUE, an OLG model which divides the world in ten broad regions. Hypotheses are elaborated on the basic trends and discussed in an historical perspective. Structural changes are then introduced into INGENUE to make prospective scenarios. A baseline scenario is built to outline the main macroeconomic features of the broad regions. This scenario being used as a benchmark is deliberately conservative as far as structural and institutional changes are concerned. It depicts Western Europe as an ageing low-growth region, accumulating net foreign assets and enjoying an appreciating real exchange rate. These are the characteristics of a permanent creditor in a world growth regime supported by capital mobility. The frontiers of Europe are investigated in the last part of the paper by means of two alternative scenarios. First it is assumed that EU enlargement accelerates the technological catch-up of Eastern Europe and boosts growth. Second labour mobility is simulated. Because the cost of financing public retirement is higher in Western Europe, a policy of immigration is implemented to eschew the decline of the labour force. Both the beneficial effects on Western Europe and the adverse effects on the regions of emigration are displayed.

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Paper provided by Sciences Po in its series Sciences Po publications with number info:hdl:2441/2221.

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Date of creation: Mar 2005
Handle: RePEc:spo:wpmain:info:hdl:2441/2221
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  1. E. S. Phelps, 1966. "Models of Technical Progress and the Golden Rule of Research," Review of Economic Studies, Oxford University Press, vol. 33(2), pages 133-145.
  2. Maurice Obstfeld & Kenneth S. Rogoff, 1996. "Foundations of International Macroeconomics," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262150476, July.
  3. Robert E. Lucas, 2000. "Some Macroeconomics for the 21st Century," Journal of Economic Perspectives, American Economic Association, vol. 14(1), pages 159-168, Winter.
  4. Modigliani, Franco, 1986. "Life Cycle, Individual Thrift, and the Wealth of Nations," American Economic Review, American Economic Association, vol. 76(3), pages 297-313, June.
  5. Maurice Obstfeld & Kenneth Rogoff, 2001. "The Six Major Puzzles in International Macroeconomics: Is There a Common Cause?," NBER Chapters,in: NBER Macroeconomics Annual 2000, Volume 15, pages 339-412 National Bureau of Economic Research, Inc.
  6. Jonathan Temple, 1999. "The New Growth Evidence," Journal of Economic Literature, American Economic Association, vol. 37(1), pages 112-156, March.
  7. Helmut Reisen, 2000. "Pensions, Savings and Capital Flows," Books, Edward Elgar Publishing, number 2017.
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