International economic interdependence: the Commission of the European Communities' meteor model

Abstract

The policy responsibilities of the EEC Commission require that it analyse the short term, macro-economic performance of the member States and, in particular, the transmission of economic impulses within the Community. The fact that one half of Community imports are generated in trade between the member States underlines the substantial degree of economic interdependence that exists between them. Moreover, the size of the Community in terms of its foreign trade (it accounted for 37 per cent of world trade in 1975) and the openness of the Community economy (imports were equivalent to 22 per cent of GDP in 1975) require that the interaction between the Community's economy and that of the rest of the world also be measured. Substantial resources in time and manpower have been devoted to the study of these questions in the Commission for many years but it was not until the beginning of the 1970s that the decision was taken to construct a short-term econometric model of the Community economies.