scholarly journals Estimating the Output Gap for Saudi Arabia

2017 ◽  
Vol 9 (3) ◽  
pp. 81 ◽  
Author(s):  
Ryadh M. Alkhareif ◽  
William A. Barnett ◽  
Nayef A. Alsadoun
Keyword(s):  
Output Growth ◽  
Total Output ◽  
Output Gap ◽  
Potential Output ◽  
Real Gdp ◽  
Advanced Economies ◽  
Production Function Approach ◽  
Potential Gdp ◽  
The Difference ◽  
Potential Output Growth

The objective of this paper is to estimate annual potential output growth and the output gap for the Saudi economy over the period 1980 to 2015, looking at both total output and non-oil output. The focus on the latter is so that the progress in diversifying the economy might be examined and the possible impact of diversification on potential output might be measured. We use three methods for estimating potential output proposed in the macroeconomic literature. The methodologies include the Hodrick-Prescott filter, Kalman filter, and the production function approach. We compare the three over the entire sample and the last five years. Our findings suggest that the output gap (the difference between actual and potential output, as measured by real GDP) is positive on average over the entire period (i.e., actual output has on average exceeded potential); however, the gap has turned negative and has shrunk in recent years, as fiscal expenditures, particularly in infrastructure, have acted to better align actual and potential. Our analysis also indicated that growth in both potential GDP and total factor productivity have accelerated in the 2011-2015 period. In contrast, growth in these factors has slowed in many other countries, particularly the advanced economies. This better performance of the Saudi economy is possibly due to the development of a resilient financial sector in the Saudi economy.

scholarly journals Estimating the Output GAP for Lebanon: A Production Function methodology

2019 ◽  
Vol 2 (1) ◽  
pp. 60-83
Author(s):  
Latifa Ghalayini
Keyword(s):  
Economic Growth ◽  
Economic Policy ◽  
Labor Market ◽  
Production Function ◽  
Output Growth ◽  
Output Gap ◽  
Structural Reforms ◽  
Potential Output ◽  
Potential Output Growth ◽  
Douglas Production Function

This paper estimates the output Gap for Lebanon to analyze the economic policy and to judge the stance of the economy. Therefore, a Cobb-Douglas production function is estimated for the period Q11998 to Q42015 and potential output calculated by substituting for potential levels of the factors in the estimated production function. The calculation of potential labor required the calculation of the NAIRU. This paper calculates therefore three types of NAIRU. The results of output gap calculations show that the Lebanese economy is working over its capacity and that it hits his limits. Furthermore, findings show that the labor market is characterized by high levels of NAIRU which restricted potential output growth. Therefore, any policy aiming to increase economic growth, while neglecting structural reforms will prove to be unsustainable.

2015 Spillover Report

Policy Papers ◽  
2015 ◽  
Vol 2015 (43) ◽  
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.

scholarly journals Population Projection Revisions and Their Impact on Economic Growth – The Case of Malta

2019 ◽  
Vol 11 (3) ◽  
pp. 69
Author(s):  
Aaron George Grech ◽  
Ian Borg
Keyword(s):  
Output Growth ◽  
Population Projections ◽  
Short Term ◽  
Potential Output ◽  
Production Function Approach ◽  
Migration Flows ◽  
Potential Output Growth ◽  
Economic Forecasts ◽  
Stable Variable ◽  
Standard Production

Typically, in short-term economic forecasts, population projections, and their related impact on the availability of labour, tend to be the most stable component. The scope of this paper is to show how in the case of Malta, the European Union’s smallest economy, migration flows have led to substantial revisions in population projections. Using the standard production function approach to estimate potential output growth, these revisions change very substantially expectations of economic expansion. Revisions in population projections are, in fact, estimated to have boosted Malta’s potential output growth in future years by as much as half a percentage point. While potential output is seen as a fairly stable variable for medium and large economies, it is more of a fluid concept for small open economies that are subject to large migration flows.

scholarly journals Post-Crisis Potential Output in the Western Balkans

2013 ◽  
Vol 8 (1) ◽  
pp. 23-33
Author(s):  
Naida Čaršimamović Vukotić ◽  
Irena Jankulov Suljagić ◽  
Irina Smirnov
Keyword(s):  
Time Series Data ◽  
Output Growth ◽  
Series Data ◽  
Filter Method ◽  
Western Balkans ◽  
Potential Output ◽  
Balkan Countries ◽  
Potential Gdp ◽  
Potential Output Growth ◽  
Output Gaps

Abstract Spurred by the recent global economic crisis, there has been a resurgence of research on output gaps. As the crisis caused a decline in potential GDP due to a strong contraction in demand, it is expected that the recovery of potential output will be especially difficult in demand-driven small open economies, such as the Western Balkan countries, where recovery will strongly depend on global international trade recovery. The purpose of this research is to calculate and compare pre and post-crisis potential GDPs and GDP gaps for the Western Balkan countries. The symmetric filter method developed by Hodrick and Prescott is used to de-trend GDP time series data by decomposing it into growth and cyclical components. The results point to a strong decrease in potential output growth compared to the pre-crisis potential output growth of the Western Balkans.

scholarly journals Secular Stagnation and Income Distribution Dynamics

2020 ◽  
Vol 52 (2) ◽  
pp. 189-207
Author(s):  
David Kiefer ◽  
Ivan Mendieta-Muñoz ◽  
Codrina Rada ◽  
Rudiger von Arnim
Keyword(s):  
Income Distribution ◽  
Capacity Utilization ◽  
The United States ◽  
Output Growth ◽  
Model Specification ◽  
Secular Stagnation ◽  
Labor Share ◽  
Potential Output ◽  
Us Economy ◽  
Potential Output Growth

This paper contributes to the literature on secular stagnation by estimating a measure of potential output growth for the post-war US economy derived from a novel model specification that allows for the cyclical interactions between income distribution, represented by the trajectory of the labor share of income, and economic activity, as measured by capacity utilization. The results obtained show that potential output growth exhibits a gradual decline that predates the Great Recession and follows the downward trajectory of the labor share of income, thus suggesting the existence of an important long-run relationship between income distribution and output growth in the United States.

scholarly journals ICT diffusion and potential output growth

2005 ◽  
Vol 87 (2) ◽  
pp. 231-234 ◽  
Author(s):  
Gilbert Cette ◽  
Jacques Mairesse ◽  
Yusuf Kocoglu
Keyword(s):  
Output Growth ◽  
Potential Output ◽  
Potential Output Growth

scholarly journals Potential Output in Asia: Some Forward-Looking Scenarios

2016 ◽  
Vol 33 (2) ◽  
pp. 28-55
Author(s):  
Andrew Burns
Keyword(s):  
Total Factor Productivity ◽  
Productivity Growth ◽  
Output Growth ◽  
Total Factor Productivity Growth ◽  
Investment Climate ◽  
Participation Rates ◽  
Factor Productivity ◽  
Potential Output ◽  
Asian Economies ◽  
Potential Output Growth

This paper presents estimates of potential output growth for a sample of 26 Asian economies and projects potential output growth through 2040 under several scenarios. Results suggest that in the absence of further capital deepening, and assuming continued total factor productivity growth at recent rates, potential output growth across economies could slow from a median of 4.6% during 2010–2015 to 2.7% between 2035 and 2040. Demographic trends and an assumed stabilization in capital–output ratios account for most of the slowing. Much better outcomes are possible if trends are supported by policy. Better total factor productivity growth could raise potential output by between 11% and 24% by 2040, while lower unemployment and higher participation rates could boost potential output by 10% or more in some South Asian economies. An improved investment climate could add between 6% and 10% to potential output in most economies, while accelerating structural convergence (moving labor from lower to higher productivity sectors) could raise potential output by 10% or more in half of the examined countries.

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