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World Growth and International Capital Flows in the XXIst Century : A Prospective Analysis with the INGENUE2 Model

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Listed:
  • 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)

  • Gilles Le Garrec

    (Observatoire français des conjonctures économiques)

  • Vincent Touze

    (Observatoire français des conjonctures économiques)

Abstract

The ongoing pattern of capital flows is quite unusual. All emerging market economies finance American consumers who live beyond their means. This is clearly a misallocation of world saving that is unsustainable in the long run. The present paper uses the INGENUE2 worldwide growth model to shape the conjecture of a growth regime for the first half of this century. The engine of growth rests on demographic and technological forces tied up together in a catching up process involving very large countries. In this process, capital flows will substantiate an intergenerational saving transfer to the huge number of people who aspire to get access to Western standard of life. Two scenarios explore the consistency of this prospect: a baseline scenario with relatively conservative hypotheses and a fast-growth scenario in China and India. In both scenarios Western Europe and Japan appear to be structural capital exporters with appreciating real exchange rates. The US will progressively save more and recovers a strong foreign net position. Meanwhile no scenario will prevent world growth from decelerating with demographic trends.

Suggested Citation

  • Michel Aglietta & Vladimir Borgy & Jean Chateau & Michel Juillard & Jacques Le Cacheux & Gilles Le Garrec & Vincent Touze, 2006. "World Growth and International Capital Flows in the XXIst Century : A Prospective Analysis with the INGENUE2 Model," Sciences Po publications N° 2006-07, Sciences Po.
  • Handle: RePEc:spo:wpmain:info:hdl:2441/2283
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    References listed on IDEAS

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    1. Yan Wang & Fan Zhai, 2004. "La réforme des retraites en Chine : enjeux, options et conséquences," Revue d'Économie Financière, Programme National Persée, vol. 77(4), pages 309-328.
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    Cited by:

    1. Seth G. Benzell & Eugene Goryunov & Maria Kazakova & Laurence J. Kotlikoff & Guillermo LaGarda & Kristina Nesterova & Andrey Zubarev, 2015. "Simulating Russia’s and Other Large Economies’ Challenging and Interconnected Transitions," NBER Working Papers 21269, National Bureau of Economic Research, Inc.

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