National Economic Policy Simulations with Global Interdependencies: A Sensitivity Analysis for Germany

Bernd Meyer, Christian Lutz, Peter Schnur and Gerd Zika ()

Economic Systems Research, 2007, vol. 19, issue 1, 37-55

Abstract: Policy simulations for national economies with econometric models, in general, are done using a standalone national model with exogenous export values and import prices. In a globalised world, such an exercise is critical, since the policy in question may change the export prices and the import volumes of the particular country and induce via international trade a change of the economic activities of the global economy and a feedback to the export values and import prices of the particular country. This paper presents a sensitivity analysis for Germany comparing the impacts of a shock on investment in a standalone simulation using the multisector model INFORGE with the results, which occur, if the same model is linked to the global multicountry/multisector model GINFORS endogenising Germany-super-`s export values and import prices. The results are striking: the effect on real GDP is 50% higher in the global simulation than in the standalone case. Because of the specialisation in trade the differences on the sector level are even stronger.

Keywords: Policy simulation; econometric models; global modelling (search for similar items in EconPapers)
Date: 2007
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Citations: View citations in EconPapers (25)

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DOI: 10.1080/09535310601164765

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