New economic model predicts impact of shocks on German sectors.
A detailed economic model for Germany with 71 sectors was created using data from 2007. The model can predict how different shocks will affect output and employment in various sectors of the German economy. The researchers started with a basic 2-sector model and expanded it to 71 sectors. They used specific functions to represent production, household utility, and foreign trade. The model was successfully set up and the estimated production elasticities were in line with expectations. The researchers also looked at ways to estimate consumption and trade elasticities for future improvements.