Open AccessModelling the world economy at the 2050 horizon
Author(s) -
Fouré Jean,
BénassyQuéré Agnès,
Fontagné Lionel
Publication year - 2013
Publication title -
economics of transition
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.351
H-Index - 51
eISSN - 1468-0351
pISSN - 0967-0750
DOI - 10.1111/ecot.12023
Subject(s) - economics , constraint (computer aided design) , productivity , investment (military) , capital (architecture) , macroeconomics , baseline (sea) , economy , mechanical engineering , history , oceanography , archaeology , politics , political science , engineering , geology , law
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 (Ma GE – 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 .