Methodische Fragen mittelfristiger gesamtwirtschaftlicher Projektionen am Beispiel des Produktionspotenzials

Gustav Horn, Camille Logeay and Silke Tober

No 01-2007, IMK Studies from IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute

Abstract: Potential output measures a country's attainable aggregate living standard and is thus one of the most important categories of economics. It is also a key indicator for monetary and fiscal policy. Despite its prominence, however, potential output is a difficult concept to pinpoint theoretically and even more so empirically. The study discusses these difficulties and also the marked revision of potential output estimates by major international organizations. The authors furthermore present the results of their attempts to quantify Germany's potential output based on a production function approach coupled with the Kalman-filter technique to estimate the NAIRU. The authors find that potential output and potential output growth greatly depend on how the NAIRU and potential total factor productivity are modelled. Given the difficulties involved in robustly estimating potential output, especially in real time, economic policy makers need to learn to pursue their policy objectives without reference to this variable.

Pages: 173 pages
Date: 2007
New Economics Papers: this item is included in nep-cba and nep-mac
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