The Great Shift: Macroeconomic Projections for the World Economy at the 2050 Horizon
Centre d'Etudes Prospectives et d'Info. Internationales (CEPII)
Paris School of Economics (University Paris 1)
University of Paris - Paris School of Economics; European University Institute - Robert Schuman Centre for Advanced Studies (RSCAS); Banque de France; CEPII
February 10, 2012
CEPII Working Paper No. 2012-3
We present growth scenarios for 147 countries to 2050, based on MaGE (Macroeconometrics of the Global Economy), a three-factor production function that includes capital, labour and energy. We improve on the literature by accounting for the energy constraint through dynamic modelling of energy productivity, and departing from the assumptions of either a closed economy or full capital mobility by applying a Feldstein-Horioka-type relationship between savings and investment rates. Our results suggest that, accounting for relative price variations, China could account for 33% of the world economy in 2050, which would be much more than the United States (9%), India (8%), the European Union (12%) and Japan (5%). They suggest also that China would overtake the United States around 2020 (2040 at constant relative prices). However, in terms of standards of living, measured through GDP per capita in purchasing power parity, China would still lag 10 percent behind the United States at the 2050 horizon.
Number of Pages in PDF File: 104
Keywords: GDP projections, long run, global economy
JEL Classification: E23, E27, F02, F47working papers series
Date posted: February 15, 2012
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