Predicting Germany's Real GDP

This is a continuation of the previous post, where the model is presented.

In alphabetical order, the next country to predict the evolution of real GDP per capita is Germany. The best fit constant A=$260 and the defining age is eighteen years. The age distribution from 2002 allows a prediction at an 18-year horizon. From Figure 3, one can expect a slow-down in 2009 and likely a recession in 2011. Here, we would like to accentuate that the prediction of the 2009 slowdown could be obtained in 2002, i.e. seven years before it happened! The estimates of population age structure are slightly noisy, however. Otherwise, the agreement between the observed and predicted curves is excellent after some years of turbulence associated with the reunification.

Figure 3. Observed and predicted rate of real GDP growth in Germany after the reunification. The predicted curve is obtained from relationship (2) with A=$260 (1990 US dollars). Left panel: original curves. Right panel: the original curves smoothed with MA(3). One should not expect a recession period before 2011, but the year of 2009 is very close to a recession.

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