Forecasting the Interindustry Development of the German Economy: The Model I FORGE

INFORGE is a German interindustry forecasting model, that is based on the INFORUM philosophy. It has been used in a wide range of applications in the last years and is updated annually. The structure of the model is explained in detail. It contains an input-output module, an SNA and financial module and depicts the labour market in great detail. As almost all variables are endogenous to the model, only a few policy variables have to be set exogenously. Probable assumptions for the next years are discussed, that form a base scenario. Results of the base simulation until 2015 show, that Germany will reach again historical annual growth rates of GDP of about 2% after overcoming the current crisis. Trade will grow much faster throughout the simulation period. Public consumption is restricted due to the European stability pact. Construction will not recover, as population forecasts show a decline after 2010. Problems on the labour market diminish in the long run because of demographic change. Employment in manufacturing, agriculture and mining will decline in favour of services. But simulation results show that this shift is not caused by changes in the structure of production but due to higher productivity growth in manufacturing. In contrast to other countries, German manufacturers will keep their share in production.