GDP rate in the European Union: Simulations based on panel data models

Abstract

The objective of this paper is to provide more details regarding the evolution of real GDP growth in the countries of the European Union (EU-28) in the period from 2004 to 2015 based on a panel data approach. According to the estimations based on some dynamic panel data models, an any increase in the real GDP rate in the previous period by one percentage point, the real GDP rate in the current period will increase by 0.3 percentage points up to 0.5 percentage points. According to the Fixed Effects Model with time and individual effects, the real GDP growth is explained by the employment. According to simulations for 2016 and 2017 based on Dynamic Model and the Fixed Effects Model, the last model predicting higher GDP rates with respect to dynamic models. The result of this study is the estimation of the real GDP rates in EU-28 countries, which are based on presented econometrics models. The annual average of employment as the main factor of GDP growth is taken into account. © Foundation of International Studies, 2016.