A Demoeconometric Model of Poland and its Application to Counterfactual Simulations

This paper presents the results of modeling the impact of economic factors in the Polish economy on basic demographic phenomena and in turn, the way these phenomena act on various economic variables, especially those pertaining to employment levels. After a brief exposition of the main characteristic features of the Polish economy, the author explains the method by which the equations of the model are built and presents the estimated structural form of the model. The results are used to obtain the reduced form which is later used for a number of counterfactural simulations. These simulations are based on two scenarios. One of them assumes that during the period covered by sample data, i.e., 1960-1976, Poland was experiencing steady but moderate economic growth. The second scenario was built on the assumption of fast economic growth, coupled with a strong rise in the standard of living. When the counterfactual simulations were performed it was found that the two different economic policies would have had a substantially different impact on such demographic variables as birth rates, death rates, and migrations from rural to urban areas, as well as on employment levels in the three sectors of the national economy considered, namely nonagricultural productive activities, agriculture, and services