Recessions and potential output

• Verfasst von: Dovern, Jonas [VerfasserIn]
• Verfasst von: Zuber, Christopher [VerfasserIn]
• Titel: Recessions and potential output
• Titelzusatz: disentangling measurement errors, supply shocks, and hysteresis effects*
• Verf.angabe: Jonas Dovern, Christopher Zuber
• Jahr: 2020
• Jahr des Originals: 2019
• Umfang: 36 S.
• Fussnoten: First published: 24 May 2019 ; Gesehen am 13.01.2021
• Titel Quelle: Enthalten in: The Scandinavian journal of economics
• Ort Quelle: Oxford : Wiley-Blackwell, 1975
• Jahr Quelle: 2020
• Band/Heft Quelle: 122(2020), 4, Seite 1431-1466
• ISSN Quelle: 1467-9442
• DOI: doi:10.1111/sjoe.12385
• Datenträger: Online-Ressource
• Sprache: eng
• Sach-SW: Hysteresis
• Sach-SW: OECD
• Sach-SW: output gap
• Sach-SW: potential output
• Sach-SW: trend
• K10plus-PPN: 1744591601

Abstract

This paper investigates expert revisions of potential output (PO) estimates following recessions. Using data from the Organisation for Economic Co-operation and Development (OECD), we show that downward revisions are substantial, permanent, and mostly driven by supply shocks. In contrast, PO estimates do not significantly react to demand shocks. Revisions are also partly caused by mismeasurement of PO before recessions. In particular, we show that the length of the preceding boom and pre-recession values of the current account balance and credit volumes are correlated with post-recession PO revisions. Our results call for improved methods for estimating PO and provide evidence against the existence of substantial hysteresis following demand shocks.