Modelling the world economy at the 2050 horizon

Jean Fouré (1) , Agnès Bénassy-Quéré (1, 2, 3) , Lionel Fontagné (1, 2, 3, 4)

1 CEPII - Centre d'Etudes Prospectives et d'Informations Internationales
2 PSE - Paris School of Economics
3 CES - Centre d'économie de la Sorbonne
4 Department of Economics

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 (MaGE - 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.

Mots clés: GDP projections; long run; global economy

Domaines: Economies et finances

Jean Fouré, Agnès Bénassy-Quéré, Lionel Fontagné. Modelling the world economy at the 2050 horizon. Economics of Transition, 2013, 21 (4), pp.617-654. ⟨10.1111/ecot.12023⟩. ⟨hal-00975545⟩