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„POTENTIAL OUTPUT AND BARRIERS TO GROWTH”
ZALESIE GÓRNE 2003
Alternative Methods of Estimating Potential Output and the Output Gap: An Application to Sweden
Valerie Cerra and Sweta Chaman Saxena
1
NBP CONFERENCE
„POTENTIAL OUTPUT AND BARRIERS TO GROWTH”
ZALESIE GÓRNE 2003
© 20030 International Monetary Fund
WP/00/59
IMF Working Paper European I Department Alternative Methods of Estimating Potential Output and the Output Gap: An Application to Sweden Prepared by Valerie Cerra and Sweta Chaman Saxena1 Authorized for distribution by Sharmini Coorey March 2000
Abstract
The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate.
This paper reviews a number of different methods that can be used to estimate potential output and the output gap. Measures of potential output and the output gap are useful to help identify the scope for sustainable noninflationary growth and to allow an assessment of the stance of macroeconomic policies. The paper then compares results from some of these methods to the case of Sweden, showing the range of estimates. JEL Classification Numbers: E32, C22, C32 Keywords: Sweden, Business Cycles, Output Gap, Potential Output, Detrending, Production Function, Vector Autoregression, Unobserved Components Models Authors’ E-Mail Addresses: vcerra@imf.org; ssaxena+@pitt.edu
1
European I Department, IMF; and University of Pittsburgh, respectively. The authors would like to thank Claes Berg, Jim Boughton and Alun Thomas for helpful comments and suggestions. The usual disclaimers apply.
2
NBP CONFERENCE
„POTENTIAL OUTPUT AND BARRIERS TO GROWTH”
ZALESIE GÓRNE 2003
Contents
Page
I.
„POTENTIAL OUTPUT AND BARRIERS TO GROWTH”
ZALESIE GÓRNE 2003
Alternative Methods of Estimating Potential Output and the Output Gap: An Application to Sweden
Valerie Cerra and Sweta Chaman Saxena
1
NBP CONFERENCE
„POTENTIAL OUTPUT AND BARRIERS TO GROWTH”
ZALESIE GÓRNE 2003
© 20030 International Monetary Fund
WP/00/59
IMF Working Paper European I Department Alternative Methods of Estimating Potential Output and the Output Gap: An Application to Sweden Prepared by Valerie Cerra and Sweta Chaman Saxena1 Authorized for distribution by Sharmini Coorey March 2000
Abstract
The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate.
This paper reviews a number of different methods that can be used to estimate potential output and the output gap. Measures of potential output and the output gap are useful to help identify the scope for sustainable noninflationary growth and to allow an assessment of the stance of macroeconomic policies. The paper then compares results from some of these methods to the case of Sweden, showing the range of estimates. JEL Classification Numbers: E32, C22, C32 Keywords: Sweden, Business Cycles, Output Gap, Potential Output, Detrending, Production Function, Vector Autoregression, Unobserved Components Models Authors’ E-Mail Addresses: vcerra@imf.org; ssaxena+@pitt.edu
1
European I Department, IMF; and University of Pittsburgh, respectively. The authors would like to thank Claes Berg, Jim Boughton and Alun Thomas for helpful comments and suggestions. The usual disclaimers apply.
2
NBP CONFERENCE
„POTENTIAL OUTPUT AND BARRIERS TO GROWTH”
ZALESIE GÓRNE 2003
Contents
Page
I.