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This new outlook for the world economy is based on the Belgian Federal Planning Bureau’s NIME model and covers the period 2013-2024. The projection indicates that there should be a limited growth rebound over the period 2013-2016. Over this period, economic growth should allow a closing of the euro area’s output gap, even though world economic growth should continue to be driven mainly by countries other than those of the EU, the United States and Japan. In the longer run, world growth should decline due to a general slowdown in productivity growth, but also due to unfavourable demographic trends.
It should be noted that these 2013-2024 projections for the world economy do not serve as input for the Federal Planning Bureau’s short-term forecasts and medium-term projections for Belgium. Indeed, these latter rely on various ad hoc methodologies and integrate international forecasts from institutions such as the EU Commission, the OECD and the IMF.
In this Working Paper, we describe how we used stochastic simulation to evaluate the risks surrounding the January 2006 nime Economic Outlook (neo) for the world economy. We summarise the main results by showing confidence intervals around the baseline projection as well as probabilities that certain events will occur. The results presented in this Working Paper are of an illustrative nature and do not constitute an update of the January 2006 nime Economic Outlook.
In this Working Paper, we use the nime model to assess the macroeconomic effects of an oil price shock on the world economy. We start with an overview of the nime model, and a presentation of our modelling of oil price shocks. Next, we examine the effect of a permanent 25 per cent increase in the price of oil, under the assumption that the shock is caused by an increase in the mark-up of the oil price.
Each year, the Federal Planning Bureau (fpb) prepares a medium-term outlook for the Belgian economy with its macro-econometric hermes model. One of the key inputs of this exercise is a baseline scenario for the Belgian international economic environment, which includes an outlook for the output, imports, prices and financial variables of the major trading partners of Belgium. Traditionally, this international environment is based on the medium-term outlook presented by the European Commission in its Autumn Forecasts or the most recent available medium-term outlook of the Organisation for Economic Co-operation and Development (oecd).
The macro-econometric nime model is one of the analytical tools used by the Belgian Federal Planning Bureau to improve its understanding of developments in the Belgian international economic environment. This paper shows some concrete applications with this model by analysing the spill-over effects of shocks from the United States (us) to the euro area and the rest of the world. The shocks we investigate are a temporary increase in public expenditures in the us, a us-led world-wide permanent increase in total factor productivity, an increase in the risk premium in the us stock market, and a temporary 1 percentage point increase in the us short-term interest rate. Here, we will discuss how these shocks affect economic activity in the us and how they are transmitted to the euro area. Such an analysis can be useful because it catalogues answers to questions which are often posed by economists who want to assess their medium term projection of the euro area economy.