The futur of Luxembourg economy in world environment. Analysis based on formal description of international financial markets and real flows.

Summary Luxembourg is the 3rd largest exporter of financial services in the world. It is one of the countries that receives the most direct investment from abroad, which indicates the intensity of its links with the world economy. The purpose of this paper is to analyze the possible influence of a global economy characterized by the interdependence of real and financial markets on the Luxembourg economy. Chapter 1 presents an analysis of the interactions of the Luxembourg economy with the outside world. The next chapter is devoted to a review of the literature on modeling financial intermediation at the macroeconomic level, covering several types of modeling approaches. Finally, the third chapter includes a multi-country macroeconometric model built and analyzed to simulate plausible scenarios. The model is presented with its theoretical foundations, simulation results and a comparison with other models. The novelty of the model lies in its consideration of disaggregated international trade in financial and other services, and international portfolio investments with their securities and capital flows, and their impact on economic growth. The results of the simulations show that this analytical framework sometimes produces different results than standard models. A number of scenarios that cannot be simulated by other models, such as a decline in international portfolio investment flows, are also analyzed and confirm Luxembourg's high vulnerability to external shocks in the financial markets.