GDP Growth, Potential Output, and Output Gaps in Mexico

Subject Finland's economy. Significance The Finnish economy contracted from 2012 to 2014 and grew by only 0.5% last year. It has been facing both structural and cyclical headwinds and since 2010 three different governments have been unable to jump-start it. However, the current one-year-old Finnish government has staked much of its political capital on various reforms which are expected to lead to a resumption of growth and a slower increase in public debt. Impacts Due to demographic trends, Finland's long-term growth potential is estimated to be below 2%. Prolonged economic stagnation in the EU and Russia is likely to depress export and GDP growth. The pension age in Finland will increase automatically as life expectancy rises, which may be a model for other European countries.

Estimating the Potential Output and Output Gap of Ghana

Applied Economics and Finance ◽

10.11114/aef.v6i3.3958 ◽

2019 ◽

Vol 6 (3) ◽

pp. 58

Author(s):

Joseph Atta-Mensah ◽

Sawuya Nakijoba

Keyword(s):

Economic Activity ◽

Time Trends ◽

Linear Time ◽

Output Gap ◽

Annual Data ◽

Conceptual Tool ◽

Potential Output ◽

Economic Information ◽

Hp Filter ◽

Output Gaps

This paper focuses on the estimation of the potential output of Ghana. Potential output or its derivative the output gap are not observable. However, “potential output” is a powerful conceptual tool that guides analysts and policymakers in gauging whether the current observed economic activity is sustainable and how much of it is greater than or less than potential. Based on Ghanaian GDP annual data from 1960 – 2017, the paper estimates potential output and output gaps using the following methodology: linear time trends, Hodrick-Prescott (HP) filter trends, multivariate HP filter trends, and a production function model. The results show that estimates of the potential output and output gaps are model-dependent as estimates vary from one methodology to the other. The paper recommends that policymakers should not mechanically choose a model to estimate output gap. For the avoidance of costly policy mistakes, the choice of the model should be complemented with sound judgement based on a set of pertinent economic information.

Germany’s trade surplus benefits the euro-area

Emerald Expert Briefings ◽

10.1108/oxan-db238155 ◽

2018 ◽

Keyword(s):

Euro Area ◽

Domestic Demand ◽

Growth Potential ◽

Gdp Growth ◽

Trade Surplus ◽

The Czech Republic ◽

Content Type ◽

The World ◽

The Eu

Subject Germany’s trade surplus. Significance Germany runs a large trade surplus with other euro-area countries and the rest of the world. Critics have argued that wages in Germany have not increased enough in recent years and that the country should boost domestic demand. However, trade and wage developments with other euro-area countries show that such criticism is largely misguided. Impacts Germany’s offshoring of production processes helps boost GDP growth in countries such as Slovakia and the Czech Republic. Creating a more innovation-friendly environment and investing in R&D would lift the long-term growth potential of the euro-area. Completing the digital single market could contribute to more innovation across the EU.

The Updated Okun Method for Estimation of Potential Output with Broad Measures of Labor Underutilization: An Empirical Analysis

10.36687/inetwp158 ◽

2021 ◽

Author(s):

Claudia Fontanari ◽

◽

Antonella Palumbo ◽

Chiara Salvatori ◽

◽

...

Keyword(s):

Full Employment ◽

Original Method ◽

Labor Input ◽

Empirical Measures ◽

Standard Methods ◽

Potential Output ◽

Output Loss ◽

Official Rate ◽

Output Gaps ◽

Labor Underutilization

This paper extends to different indicators of labor underutilization the Updated Okun Method (UOM) for estimation of potential output proposed in Fontanari et al (2020), which, from a demand-led growth perspective, regards potential output as an empirical approximation to full-employment output, as in A.M.Okun’s (1962) original method. Based on the apparent incapability of the official rate of unemployment to fully account for labor underutilization, in this paper we offer estimates of Okun’s law both with broad unemployment indicators and with an indicator of ‘standardized hours worked’ which we propose as a novel measure of the labor input. The paper reflects on the possible different empirical measures of full employment. The various measures of potential output that we extract from our analysis show greater output gaps than those produced by standard methods, thus highlighting a systematic tendency of the latter to underestimate potential output. Output gaps that underestimate the size of the output loss or that tend to close too soon during recovery, may produce a bias towards untimely restriction.

2015 Spillover Report

Policy Papers ◽

10.5089/9781498344487.007 ◽

2015 ◽

Vol 2015 (43) ◽

Cited By ~ 2

Author(s):

Keyword(s):

Monetary Policy ◽

Aggregate Demand ◽

Output Growth ◽

Structural Reforms ◽

Demand And Supply ◽

Potential Output ◽

Advanced Economies ◽

Potential Output Growth ◽

Output Gaps ◽

The Impact

Many countries around the globe, particularly the systemic advanced economies, face the challenge of closing output gaps and raising potential output growth. Addressing these challenges requires a package of macroeconomic, financial and structural policies that will boost both aggregate demand and aggregate supply, while closing the shortfall between demand and supply. Each element of this package is important and one cannot substitute for the other: easy monetary policy will not raise potential output just as structural reforms will not close the output gap. This report studies the impact on emerging markets and nonsystemic advanced economies from monetary policy actions in systemic advanced economies, with a look also at knock-on effects from the decline in world oil prices.

Sectoral Output Gaps – Estimates for Bulgaria

Economic Alternatives ◽

10.37075/ea.2021.1.01 ◽

2020 ◽

Vol 27 (1) ◽

pp. 5-26

Keyword(s):

Structural Change ◽

Total Output ◽

Output Gap ◽

Potential Output ◽

Sectoral Output ◽

State Of The Economy ◽

Hp Filter ◽

The Individual ◽

Output Gaps ◽

The Impact

The paper reveals the impact of the output gap of the various sectors on the total output gap in the Bulgarian economy. The HP filter procedure has been applied in order to evaluate the potential output of each sector. The results show different cyclical dynamics between sectors which assumes that the structural change of production is driven not only by cyclical factors but rather by fundamental. As some of the sectoral output gaps appear to be much more volatile than others a shock in one sector can have an impact on the rest of the economy through the cross-sectoral dependencies. The last part of the paper reveals the contribution of the individual sector output gap to the overall economy output gap. Based on that, the sectors determining the cyclical state of the economy over the period 2000-2019 have been identified.

assessment of the Effectiveness of Mechanisms for Strengthening the State Sovereignty of Russia

Finance Theory and Practice ◽

10.26794/2587-5671-2018-22-5-6-26 ◽

2018 ◽

Vol 22 (5) ◽

pp. 6-26

Author(s):

V.  L.  Makarov ◽

A.  R. Bakhtizin ◽

B.  R.  Khabriev

Keyword(s):

Tax Evasion ◽

Quantitative Assessment ◽

Social Protection ◽

Positive Impact ◽

Initial Period ◽

Growth Potential ◽

Gdp Growth ◽

Cge Models ◽

Percentage Points ◽

Model Complex

In this article, the authors present a quantitative assessment of the consequences of a number of government decisions aimed at achieving accelerated economic growth, namely: 1) diversifcation of the economy; 2) reduction of the differentiation of regions; 3) increase of social protection of the population; 4) stimulation of the domestic demand. The authors used for calculations the modifed model complex developed in CEMI RAS. The complex includes a set of Computable General Equilibrium models (CGE models) and Agent-Based Models (ABMs). The author’s calculations showed, as compared with other industries, that the increase in fnancing of the sectors of the new economy leads for 7 years to the growth of GDP by 4.45 percentage points in relation to the basic version of the economy. We also established that due to tax preferences and differentiated investment policy in relation to the “problem” regions, it is possible to equalize the level of development of the subjects of the Russian Federation. The authors conclude that the process of inter-regional smoothing is time-consuming and a signifcant effect is possible after fve years from the beginning of the implementation of the relevant mechanisms. The results of the calculations showed that the increase in benefts as a whole leads to GDP growth and has a positive impact on the economic system. We also concluded that the reduction of the refnancing rate leads to an increase in GDP and lower inﬂation. With the help of the model complex, we calculated the inﬂuence of a number of illegal fnancial transactions on the main macro indicators. Quantitative assessment was carried out in three scenarios: 1) withdrawal of budget funds; 2) tax evasion by individuals and legal entities; 3) withdrawal of fnancial assets abroad. The unrealized GDP growth potential for the six years compared to the initial period was 11.107, 21.323, and 31.976 percentage points for the three scenarios, respectively. The calculations also show that almost any cash infusion into the real sector of the economy leads to GDP growth due to signifcant demonetization of the Russian economy.

COVID-19 and the Growth Potential

Intereconomics ◽

10.1007/s10272-021-0950-4 ◽

2021 ◽

Vol 56 (1) ◽

pp. 45-49

Author(s):

Michael Grömling

Keyword(s):

Physical Capital ◽

Natural Sciences ◽

Growth Potential ◽

Technical Knowledge ◽

Negative Effects ◽

Macroeconomic Factors ◽

Government Interventions ◽

Potential Output ◽

Additional Support ◽

Scarring Effects

AbstractThe lasting economic impact of the coronavirus pandemic will become apparent in the development of the macroeconomic factors of production — labour, capital, human capital as well as the stock of technical knowledge. Changes in behaviour such as a greater acceptance of technology can strengthen potential output permanently. By contrast, negative effects may arise from growing protectionist attitudes or long-lasting uncertainties and ‘scarring effects’. In any case, the coronavirus crisis has induced a technology push. This may be intensified if digitisation gains additional support from investments in infrastructure or if the pandemic heralds a renaissance in the natural sciences — with a corresponding impact on human and physical capital as well as on technical knowledge. For the time being, it is unclear what effects the restructuring and secular structural change will have on potential output. However, dangers are lurking in the acceleration of geopolitical tensions, a misunderstanding of technological sovereignty and increasing government interventions, which, as a whole, could hamper innovation and investment.

Fiscal and Financial Responses to the Economic Downturn

National Institute Economic Review ◽

10.1177/0027950110364105 ◽

2010 ◽

Vol 211 ◽

pp. R51-R62 ◽

Cited By ~ 3

Author(s):

Ray Barrell ◽

Dawn Holland

Keyword(s):

Output Growth ◽

Economic Downturn ◽

Quantitative Easing ◽

Potential Output ◽

Policy Responses ◽

The Us ◽

Potential Gdp ◽

The Uk ◽

Output Gaps ◽

Active Policy

The financial crisis that started in the summer of 2007 and worsened in the autumn of 2008 has involved a repricing of risk and a reduction in the level of potential output in the OECD of between 3 and 5 per cent. In addition it has caused a major recession, leaving output gaps in the UK, the US and the Euro Area currently standing at 3 to 5 per cent of potential GDP despite active policy responses. We show that monetary policy (and especially quantitative easing) has increased output growth in the US and the UK by half a per cent in 2009, and will do the same in 2010Q1. Fiscal policy is also shown to have been effective, but we argue that more could have been done if unfounded worries about excess borrowing had not arisen.