Fifteen years after the Global Financial Crisis: Recessions and Business Cycles in the History of Economic Thought

Modelling Europe. The French Contribution to European Multi-Country Macroeconometric Modelling

Sergi Francesco, Université Paris Est Créteil, LIPHA

In his comparative study of Dutch and French macroeconometric modelling traditions, Alain Derosières pointed out the specificity of French experience, embedded with the distinctive French planning procedures from the 1950s and 1960s. However, at the end of the 1970s, French macroeconometric modelling started aligning with US and internationalized standards of this approach. During this period, some French macroeconometricians participated actively to forge a European network of macroeconomists, through the organization of the International Seminar on Macroeconomics. Similarly, disequilibrium theory—another French “specialty”—was also inspiring joint works at the European level. Our paper documents another channel of the dialogue between French macroeconometric modellers and their European counterparts: that is, the French participation to multi-country models devised by the Directorate General for Economic and Financial Affairs (DG II) of the Commission of the European Economic Community. In 1978, the DG II started developing an ambitious multi-country macroeconometric model, named EUROLINK. This model assembled various national macroeconometric models (initially, from France, West Germany, Italy, and the United Kingdom) into one single system, following the “decentralized” approach to multi-country modelling, inspired by the US-based “Project LINK”. EUROLINK included, as the model of the French economy, METRIC, a model that had been devised by the INSEE a few years earlier. Our contribution documents the interaction between French modellers at the INSEE, in charge of METRIC, and the DG II EUROLINK team, as well as the other national modellers involved with the EUROLINK project. METRIC was by far the largest and most detailed national model among those included in EUROLINK; moreover, METRIC included distinctive “tension indicators” inspired from disequilibrium theory. Thus, we investigate how the specificities of METRIC involved theoretical, computational, and empirical challenges for its integration to EUROLINK—that is, for making METRIC consistent with models resulting from other European national traditions and different stages of the development of such macroeconometric approach. Thus, our paper contributes to locating French economics into a more complex internationalisation process than a simple shift towards “Americanisation”, insofar as the connection with other Europeans and with the EEC institutions provided another significant channel for the dissemination of theories and modelling practices.

Area: Eshet Conference

Keywords: History of macroeconomics, History of international economics, Macroeconometric Modelling, European Commission

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