The economics underlying NiGEM

Model Coverage

Most countries in the OECD are modeled separately. The rest of the world is modeled through regional blocks: Latin America, Africa, East Asia, Developing Europe, OPEC and a Miscellaneous group mainly in West Asia. All models contain the determinants of domestic demand, export and import volumes, prices, current accounts and net assets, and the OECD countries are more complex than those of the non-OECD countries.

The core of each of these country models consists of a production function determining output in the long term; a wage-price block; a description of the government sector; consumption, personal income and wealth; international trade; and financial markets. We use a dynamic error-correction structure on the estimated equations, which allows the model to adjust gradually towards equilibrium in response to a shock. In some cases the speed of adjustment will depend on expectations as well as distance from equilibrium

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