Financial University under the Government of the Russian Federation MACROPLANNING IN GERMANY MACROPLANNING OF THE REAL SECTOR PREPARED BY: ZINOVYEV VASILY IFF 4-1 MOSCOW 2017

Macroeconomic models. AuthorModelApplication W. Krelle (1960)The BONN Models Contained a system of equations that explained the labour market; was widely used for policy simulations; was used for business cycle monitoring, short-term forecasting and for the simulation of the impacts of fiscal and monetary policies. G. Hansen and U. Westphal (mid- 70s) The SYSIFO Model In 1982, it replaced the Bonn model in the world economy model maintained by Project LINK. It was used in short-term forecasting and in monitoring the developments in the FRG economy, also serving educational purposes. U. Heilemann (mid 70s)The RWI Models of Business Cycles was replaced by a medium-sized quarterly model of Western Germany, which was intended for forecasting and short-term analysis purposes This medium-sized model became the main model of the German economy D. Lüdecke (1969)The Freiburger Model it was operated jointly with the financial sector model; was used for forecasting and policy simulations The Central Federal Bank of the FRGThe Bundes Bank Quarterly Model supported short-term forecasting and then many simulation analyses of the monetary policy impacts H.-J. HansenDisequilibrium Models assumed that three types of constraints existed: demand for goods, production capacity and labour supply. It applied the min-condition at the aggregate level

GDP (current US$) Source: The World Bank

Germany GDP from manufacturing

GNI (per capita) Germany

Germanys export

Germanys composition of GDP

Inflation.

Unemployment

Positive Forecast

Negative Forecast

Baseline Forecast

SWOT Analysis Streangth Healthy public finances Strong manufacturing base (one quarter of GDP) Production and export of high-end products Adequate export diversification (products and trade partners) Current account surpluses since 2002 Easy to export and to invest with less restriction Low systemic political risk (low corruption and high political stability) Good regional and international relations; EU membership; G7, G20 Weakness Ageing population Declining birth rate Dependence on exports Low investment-to-GDP ratio (20% in 2015) Vulnerability to slowdown in Chinese demand, especially investment spending Exposure to Eurozone growth Strict labor unions and high labor costs About 65% the government revenue comes from labor taxes Demand in highly skilled labor

SWOT Analysis Opportunities: Located at the center of Europe Entrepreneurial culture may be further developed Rising competitive pressures for skilled labor could be met with a more active immigration policy. Building on what has been achieved - High Innovation Rate and R&D Leadership will continue to bring new technologies to market Threats: Slower growth or even a soft landing in China could place new pressure on German exports. Stabilization of Eurozone financial markets remains precarious. Political issues and policies may harm economic environment of a country and its investment attractiveness Increasing global pressure whether economic or political Demographic change may reduce labor force