International economy

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The Belgian economy is, by nature, very open. To enable a better analysis of the functioning of the European and the world economy and its effects on the Belgian economy, the FPB has developed two models: the NIME model and the NEMESIS model. Both models are no longer used by the FPB, although developments in the world economy are of course still closely monitored and analysed in the framework of the short-term forecasts and medium-term projections for the Belgian economy.

Methods and tools

The NIME and NEMESIS models are economic annual models that use econometric techniques. The models are developed and implemented on the FPB’s econometric platform IODE.

The NIME model

The NIME model is a world macroeconometric model that has been developed by the FPB. The model was used to produce medium-term outlooks for the world economy and to analyse the transmission mechanisms of economic policies and exogenous shocks.

In the NIME model, the world is divided into six blocs: the euro area, the western EU Member States outside the euro area, the new EU Member States outside the euro area, the United States, Japan and a bloc representing the rest of the world. All these blocs are linked together by trade and financial flows.

In all of these blocs but two - the new EU Member States and the rest of the world - a representative household sector, an enterprise sector, a government sector and a monetary sector are modelled. A similar set of behavioural equations and accounting identities is specified for each of the blocs; the parameter values of the equations are obtained using econometric techniques.

The NEMESIS model

NEMESIS (New Econometric Model for Environmental and Sustainable development and Implementation Strategies) is a macrosectoral econometric model built to aid decision-making in the fields of energy, the environment and economic policy.

NEMESIS was built for two main purposes:

  • the production of short-term and medium-term projections;
  • the analysis of economic policy issues, especially in the fields of the environment and R&D.

The project, co-financed by the European Commission, has been developed by a European consortium that included, the Federal Planning Bureau, SEURECO (Société Européenne d’Economie, Paris, France) and the Institute of Computer and Communication Systems (NTUA - University of Athens).

NEMESIS is a large econometric model incorporating about 288 000 equations and 400 000 variables.

NEMESIS covers the whole of Europe. The rest of the world is divided into ten different geographical areas and is assumed to be exogenous.

The model distinguishes 30 production sectors and 27 consumption functions. The data series are from databases provided by EUROSTAT, OECD and IEA and also from national sources.

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