[go: up one dir, main page]
More Web Proxy on the site http://driver.im/
IDEAS home Printed from https://ideas.repec.org/a/eee/eecrev/v158y2023ics0014292123001927.html
   My bibliography  Save this article

Multi-country modelling at the commission of the European communities: Centralised and decentralised approaches

Author

Listed:
  • Acosta, Juan
  • Rancan, Antonella
  • Sergi, Francesco
Abstract
Since the early days of the European economic and monetary integration, European institutions have faced policy challenges requiring an assessment of the economic interdependencies across countries and the spillover effects of national policies. Some of these challenges have been addressed by developing multi-country models. By looking at the origins of multi-country modelling, we highlight the existence of a long-standing dilemma: the choice between the “centralized” approach, relying on homogeneous specifications of national economies and the “decentralized” approach, which “links” heterogeneous pre-existing national models. This article documents the debates over these two approaches, as the dilemma was confronted by macroeconomists working for the Directorate General of Economic and Financial Affairs (“DG II”) in the 1970s and 1980s. We explore the intellectual and institutional reasons that brought DG II to follow the decentralized approach for their first in-house multi-country model (“EUROLINK”), and later caused it to abandon this model in favour of a centralized approach. We also document the innovative solutions proposed by European economists to model trade linkages across countries, and their struggle with formalizing financial flows. Overall, this case study sheds light on the issues at stake when modelling economic interdependencies.

Suggested Citation

  • Acosta, Juan & Rancan, Antonella & Sergi, Francesco, 2023. "Multi-country modelling at the commission of the European communities: Centralised and decentralised approaches," European Economic Review, Elsevier, vol. 158(C).
  • Handle: RePEc:eee:eecrev:v:158:y:2023:i:c:s0014292123001927
    DOI: 10.1016/j.euroecorev.2023.104564
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0014292123001927
    Download Restriction: Full text for ScienceDirect subscribers only

    File URL: https://libkey.io/10.1016/j.euroecorev.2023.104564?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Goutsmedt, Aurélien & Sergi, Francesco & Cherrier, Beatrice & Claveau, François & Fontan, Clément & Acosta, Juan, 2023. "To change or not to change The evolution of forecasting models at the Bank of England," SocArXiv m2cet, Center for Open Science.
    2. repec:bla:scandj:v:78:y:1976:i:2:p:200-224 is not listed on IDEAS
    3. Aurélien Goutsmedt & Matthieu Renault & Francesco Sergi, 2021. "European Economics and the Early Years of the International Seminar on Macroeconomics," Revue d'économie politique, Dalloz, vol. 131(4), pages 693-722.
    4. Emmanuel Mourlon-Druol, 2020. "Adjusting an institutional framework to a globalising world: the creation of new institutions in the EEC, 1957-1992," Journal of Economic Policy Reform, Taylor & Francis Journals, vol. 23(3), pages 273-289, July.
    5. Acosta, Juan & Cherrier, Beatrice, 2021. "The Transformation Of Economic Analysis At The Board Of Governors Of The Federal Reserve System During The 1960s," Journal of the History of Economic Thought, Cambridge University Press, vol. 43(3), pages 323-349, September.
    6. De Vroey,Michel, 2016. "A History of Macroeconomics from Keynes to Lucas and Beyond," Cambridge Books, Cambridge University Press, number 9780521898430, September.
    7. WAELBROECK, Jean, 1973. "The methodology of linkage," LIDAM Reprints CORE 142, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    8. Juan Acosta & Beatrice Cherrier & François Claveau & Clément Fontan & Aurélien Goutsmedt & Francesco Sergi, 2023. "Six Decades of Economic Research at the Bank of England," Post-Print hal-03919394, HAL.
    9. Rancan, Antonella, 2021. "The “Place Of The Phillips Curve” in Macroeconometric Models: The Case of the First Federal Reserve Board’s Model (1966-1980s)," OSF Preprints t5jrx, Center for Open Science.
    10. Ivo Maes, 2006. "THE ASCENT OF THE EUROPEAN COMMISSION AS AN ACTOR IN THE MONETARY INTEGRATION PROCESS IN THE 1960s," Scottish Journal of Political Economy, Scottish Economic Society, vol. 53(2), pages 222-241, May.
    11. Goutsmedt, Aurélien & Pinzón-Fuchs, Erich & Sergi, Francesco & Renault, Matthieu, 2019. "Reacting to the Lucas Critique: The Keynesians' Replies," OSF Preprints qxh46, Center for Open Science.
    12. Frankel, Jeffrey A, 1979. "On the Mark: A Theory of Floating Exchange Rates Based on Real Interest Differentials," American Economic Review, American Economic Association, vol. 69(4), pages 610-622, September.
    13. Jean Waelbroeck & André Dramais, 1974. "Desmos: A Model for the Coordination of Economic Policies in the EEC Countries," ULB Institutional Repository 2013/10932, ULB -- Universite Libre de Bruxelles.
    14. Giorgio Basevi & Michele Calzolari & Francoise Thys-Clement, 1983. "Monetary Authorities’ Reaction Functions in a Model of Exchange-Rate Determination for the European Monetary System," Palgrave Macmillan Books, in: Paul Grauwe & Theo Peeters (ed.), Exchange Rates in Multicountry Econometric Models, chapter 9, pages 267-284, Palgrave Macmillan.
    15. Werner Roeger & Jan in 't Veld, 1997. "QUEST II. A Multi-Country Business Cycle and Growth Model," European Economy - Economic Papers 2008 - 2015 123, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    16. BARTEN, Anton P., 1981. "COMET in a nutshell," LIDAM Reprints CORE 466, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    17. BARTON, Anton P. & d’ALCANTARA, Gonzague & CARRIN, Guy J., 1976. "COMET A medium-term macroeconomic model for the European Economic Community," LIDAM Reprints CORE 232, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    18. Ivo Maes, 2012. "Tommaso Padoa-Schioppa and the origins of the euro," Working Paper Document 222, National Bank of Belgium.
    19. Ivo Maes, 1996. "The Development of Economic Thought at the European Community Institutions," History of Political Economy, Duke University Press, vol. 28(5), pages 245-276, Supplemen.
    20. Ivo Maes & Erik Buyst, 2005. "Migration and Americanization: The special case of Belgian economics," The European Journal of the History of Economic Thought, Taylor & Francis Journals, vol. 12(1), pages 73-88.
    21. Anthonie Knoester & André Kolodziejak, 1994. "The need for economic policy coordination between Europe, Japan, and the United States: Policy recommendations for the 1990s," Open Economies Review, Springer, vol. 5(4), pages 327-346, October.
    22. Maurice Obstfeld, 1985. "Floating Exchange Rates: Experience and Prospects," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 16(2), pages 369-464.
    23. WAELBROECK, Jean, 1975. "A survey of short-run model research outside the United States," LIDAM Reprints CORE 229, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    24. repec:hal:journl:hal-04225628 is not listed on IDEAS
    25. repec:nbb:docwpp:201203-22 is not listed on IDEAS
    26. Ranuzzi, P., 1981. "The experience of the EEC Eurolink Project in modeling bilateral trade linkage equations," Journal of Policy Modeling, Elsevier, vol. 3(2), pages 153-173, May.
    27. Lucas, Robert Jr, 1976. "Econometric policy evaluation: A critique," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 1(1), pages 19-46, January.
    28. I. Maes, 1998. "Macroeconomic thought at the European Commission in the 1970s: the first decade of the annual economic reports," BNL Quarterly Review, Banca Nazionale del Lavoro, vol. 51(207), pages 387-412.
    29. I. Maes, 1998. "Macroeconomic thought at the European Commission in the 1970s: the first decade of the annual economic reports," Banca Nazionale del Lavoro Quarterly Review, Banca Nazionale del Lavoro, vol. 51(207), pages 387-412.
    30. Stephanie L. Mudge & Antoine Vauchez, 2018. "Too Embedded to Fail: The ECB and the Necessity of Calculating Europe," Post-Print hal-02736884, HAL.
    31. BARTEN, Anton P., 1971. "An import allocation model for the Common Market," LIDAM Reprints CORE 85, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    32. Matthieu Renault, 2022. "Theory to the Rescue of Large-Scale Models: Edmond Malinvaud's View on the Search for Microfoundations," Post-Print hal-03051850, HAL.
    33. James, Harold, 2012. "Making the European Monetary Union," Economics Books, Harvard University Press, number 9780674066830, Spring.
    34. Frankel, Jeffrey A, 1981. "On the Mark: Reply [On the Mark: A Theory of Floating Exchange Rates Based on Real Interest Differential]," American Economic Review, American Economic Association, vol. 71(5), pages 1075-1082, December.
    35. Bilson, John F. O., 1979. "The deutsche mark/dollar rate : A monetary analysis," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 11(1), pages 59-101, January.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Goutsmedt, Aurélien & Sergi, Francesco & Cherrier, Beatrice & Claveau, François & Fontan, Clément & Acosta, Juan, 2023. "To change or not to change The evolution of forecasting models at the Bank of England," SocArXiv m2cet, Center for Open Science.
    2. Yugang He & Zhuoqi Teng, 2024. "Navigating Uncharted Waters: The Transformation of the Bank of Korea’s Monetary Policy in Response to Global Economic Uncertainty," Mathematics, MDPI, vol. 12(11), pages 1-24, May.
    3. Plassard, Romain & Renault, Matthieu, 2023. "General equilibrium models with rationing: The making of a ‘European specialty’," European Economic Review, Elsevier, vol. 159(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Acosta, Juan & Rancan, Antonella & Sergi, Francesco, 2022. "Centralised and Decentralised Approaches to Multi-Country Macroeconometric Modelling at the Commission of the European Communities: The Short-Lived EUROLINK Model," Economics & Statistics Discussion Papers esdp22081, University of Molise, Department of Economics.
    2. Aurélien Goutsmedt & Matthieu Renault & Francesco Sergi, 2021. "European Economics and the Early Years of the International Seminar on Macroeconomics," Revue d'économie politique, Dalloz, vol. 131(4), pages 693-722.
    3. Aurélien Goutsmedt & Matthieu Renault, Francesco Sergi, 2019. "European Economics and the Early Years of the “International Seminar on Macroeconomicsâ€," Working Papers, Department of Economics 2019_50, University of São Paulo (FEA-USP).
    4. Goutsmedt, Aurélien & Truc, Alexandre, 2023. "An independent European macroeconomics? A history of European macroeconomics through the lens of the European Economic Review," European Economic Review, Elsevier, vol. 158(C).
    5. Plassard, Romain & Renault, Matthieu, 2023. "General equilibrium models with rationing: The making of a ‘European specialty’," European Economic Review, Elsevier, vol. 159(C).
    6. Ivo Maes, 2013. "Tommaso Padoa-Schioppa: Macroeconomic and Monetary Thought, and Policy-making at the European Commission," HISTORY OF ECONOMIC THOUGHT AND POLICY, FrancoAngeli Editore, vol. 2013(2), pages 21-43.
    7. Hodrick, Robert J., 1989. "Risk, uncertainty, and exchange rates," Journal of Monetary Economics, Elsevier, vol. 23(3), pages 433-459, May.
    8. Goldberg, Michael D., 1995. "Symmetry restrictions and the semblance of neutrality in exchange rate models," Journal of Macroeconomics, Elsevier, vol. 17(4), pages 579-599.
    9. Thomas Delcey & Francesco Sergi, 2019. "The Efficient Market Hypothesis and Rational Expectations. How Did They Meet and Live (Happily?) Ever After," Working Papers hal-02187362, HAL.
    10. Ivo Maes, 2009. "Economic thought at the European Commission and the creation of EMU (1957-1991)," Working Papers - Dipartimento di Economia 2, Dipartimento di Economia, Sapienza University of Rome, revised May 2009.
    11. Goutsmedt, Aurélien & Sergi, Francesco & Guizzo, Danielle, 2019. "An Agenda without a Plan: Robert E. Lucas's Trajectory throught the Public Debate," OSF Preprints 7jpa9, Center for Open Science.
    12. Aurélien Goutsmedt & Cléo Chassonnery-Zaïgouche, 2023. "Modeling intervention: The Political element in Barbara Bergmann's micro-to-macro simulation projects," Working Papers hal-04208686, HAL.
    13. Ivo Maes, 2002. "On the origins of the Franco-German EMU controversies," Working Paper Research 34, National Bank of Belgium.
    14. Peter Rowland, 2003. "Forecasting the USD/COP Exchange Rate: A Random Walk a Variable Drift," Borradores de Economia 253, Banco de la Republica de Colombia.
    15. Thomas Delcey & Francesco Sergi, 2019. "The Efficient Market Hypothesis and Rational Expectations. How Did They Meet and Live (Happily?) Ever After," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-02187362, HAL.
    16. Goutsmedt, Aurélien, 2019. "Macroeconomics at the Crossroads: Stagflation and the Struggle between "Keynesian" and New Classical Macroeconometric Programs," OSF Preprints y364t, Center for Open Science.
    17. Peter Rowland, 2003. "Forecasting The Usd/Cop Exchange Rate: A Random Walk With A Variable Drift," Borradores de Economia 2736, Banco de la Republica.
    18. KAMKOUM, Arnaud Cedric, 2023. "The Federal Reserve’s Response to the Global Financial Crisis and its Effects: An Interrupted Time-Series Analysis of the Impact of its Quantitative Easing Programs," Thesis Commons d7pvg, Center for Open Science.
    19. Tobón Arias, Alexander, 2022. "La estructura lógica de la teoría del equilibrio general dinámico estocástico," Borradores Departamento de Economía 20477, Universidad de Antioquia, CIE.
    20. Renato Filosa, 2003. "Shock monetari e reali, ciclo economico e valore dell' euro," Moneta e Credito, Economia civile, vol. 56(223), pages 295-324.

    More about this item

    Keywords

    Multi-country models; European macroeconomics; Commission of the European communities; Eurolink;
    All these keywords.

    JEL classification:

    • B22 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Macroeconomics
    • B27 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - International Trade and Finance
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:eecrev:v:158:y:2023:i:c:s0014292123001927. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/eer .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.