Discussion Paper

No. 2007-47 | October 15, 2007
A Long Run Structural Macroeconometric Model for Germany


The objective of this paper is to apply the method developed in Garratt, Lee, Pesaran, and Shin (2000) to build a structural model for Germany with a transparent and theoretically coherent foundation. The modelling strategy consists of a set of long-run structural relationships suggested by economic theory and an otherwise unrestricted VAR model. It turns out that we can rebuild the structure of the model in Garratt, Lee, Pesaran, and Shin (2003b) for German data. Five long run relations: PPP, UIP, production function, trade balance, and real money balance characterize the equilibrium state of Germany as an open economy in our structural model.

JEL Classification:

C32, E24


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Cite As

Elena Schneider, Pu Chen, and Joachim Frohn (2007). A Long Run Structural Macroeconometric Model for Germany. Economics Discussion Papers, No 2007-47, Kiel Institute for the World Economy. http://www.economics-ejournal.org/economics/discussionpapers/2007-47

Comments and Questions

Anonymous - Referee Report
November 19, 2007 - 10:41

see attached file

Anonymous - Invited Reader Comment
December 04, 2007 - 14:05

see attached file

Kurt Brannas - Decision of the Associate Editor
December 10, 2007 - 11:53

Invitation to resubmit a revised version.

The study replicates a previous UK study and uses the same modelling approach. The comments of the two readers circle in on both replication and modelling. One raises structural breaks as a potential problem for the analysis, and is generally concerned about ...[more]

... the used German data. The other suggests that the length of the paper could be reduced as it contains nothing substantially new except for the data and the empirical results.

I see both sets of views as highly relevant and urge you to account for these views in revising the paper. Both readers have some additional comments that should also be accounted for.

Anonymous - Referee Report
December 18, 2007 - 17:00

see attached file

Schneider, Chen, Frohn - Response to Referee Reports
May 06, 2008 - 13:45

see attqached file