The GFPM consists of a central WORLD model and four regional models (AFRICA, AMERICA, ASIA, and EUROPE), plus a dummy region (05) to absorb the statistical discrepancy between world imports and exports. The link between the WORLD model and the regional models is through trade. The world model generates projections of total imports to and exports from each of the four regions. For each regional model, these projections of total regional imports and exports are incorporated as sources of external demand (i.e. exports) and external supply (i.e. imports).
To make projections with the GFPM, the WORLD model is run first, generating forecasts of aggregate exports and imports for each of the four regions (the dummy region is invariant). From the point of view of a particular region, its aggregate exports are treated as demand by the world. Similarly, aggregate imports to a particular region are treated as supply from the world. Therefore, aggregate regional exports in the base year appear in the Demand sheet as demand by region 97 ("the world") and aggregate regional imports in the base year appear in the Supply sheet as supply from region 98 ("the world"). In projection years, the GFPM changes aggregate regional exports or imports by shifting demand and supply curves at the same rate as the changes in aggregate exports and imports projected by the WORLD model. For example, for each year of the projections, the GFPM calculates the percentage change in aggregate exports and imports as projected by the WORLD model and enters these by period in the Asia model's Exogenous Change sheet, through the "LinkGFPM" macro (see Appendix I).
Given this link between the WORLD and regional models, changing the WORLD model can have significant effects on the regional models, and vice versa. If the WORLD model is changed, aggregate trade flows of the regions will almost certainly be affected, so it is necessary to run the regional models again. Similarly, changing the regional models may have implications for the WORLD model (and through it, for the other regional models). For example, For example, the GDP growth rates of countries in Asia are changed, then the GDP growth rate of the Asia region in the WORLD model should also be changed and the WORLD model run again.
The sum of the country forecasts obtained from regional models does not usually exactly match the regional forecasts of the WORLD model. However, experience has shown them to be sufficiently close if parameters of the WORLD model are weighted averages of the individual country parameters, as in the current version of the GFPM.