A-LMM 2.0

Austrian Long-run Macroeconomic Model

The Austrian Long-run Macroeconomic Model (A-LMM) generates long-term projections of the Austrian economy up to fifty years. Its baseline scenario serves as macroeconomic input for microsimulation models of the Austrian pension insurance system. A-LMM is a neoclassical growth model that uses demographic indicators to determine total factor productivity growth, ICT capital accumulation, savings, and inflation. It captures labour-saving technological progress and replicates stylised facts of growing economies with ageing populations. Cohort-specific labour force participation rates are projected exogenously using a dynamic cohort model.

The Austrian Long-run Macroeconomic Model (A-LMM) is used for a long-term projection of the Austrian economy until 2075. Our baseline scenario is the input for microsimulation models of the Austrian pension insurance system. The baseline scenario fully integrates the medium-term WIFO forecast from June 2024. A-LMM 2.0 is a neoclassical growth model using demographic indicators to determine total factor productivity growth, ICT accumulation, the savings and the inflation rate. The model allows for labour saving technological progress and replicates stylised facts about growing market economies with an ageing population. The current model update incorporates the recent population forecast, information from labour market and national accounts data. Cohort-specific participation rates exogenous within A-LMM; they are projected applying the dynamic cohort method.