Revisions of potential output estimates in the EU after the Great Recession

• Verfasst von: Dovern, Jonas [VerfasserIn]
• Verfasst von: Zuber, Christopher [VerfasserIn]
• Titel: Revisions of potential output estimates in the EU after the Great Recession
• Verf.angabe: Jonas Dovern, Christopher Zuber
• Verlagsort: Munich, Germany
• Verlag: CESifo, Center for Economic Studies & Ifo Institute
• E-Jahr: 2019
• Jahr: [2019]
• Umfang: 1 Online-Ressource (circa 29 Seiten)
• Illustrationen: Illustrationen
• Gesamttitel/Reihe: CESifo working paper ; no. 7681 (May 2019) : Category 6, Fiscal policy, macroeconomics and growth
• Datenträger: Online-Ressource
• Sprache: eng
• Sach-SW: potential output
• Sach-SW: trend
• Sach-SW: output gap
• Sach-SW: hysteresis
• Sach-SW: EC
• Form-SW: Graue Literatur
• K10plus-PPN: 1669033449

Abstract

Using European Commission real-time data, we show that potential output (PO) estimates were substantially and persistently revised downwards after the Great Recession. We decompose PO revisions into revisions of the capital stock, trend labor, and trend total-factor productivity (TFP). Initially, trend TFP revisions contribute most to the overall PO revisions while all three components are almost equally important in the longer run. Revisions of the capital stock happen quickly while revisions of trend labor, mainly driven by revisions of the non-accelerating wage rate of unemployment (NAWRU), are made gradually. The relative contributions of the components to overall PO revisions differ systematically across countries. This suggests that heterogeneous policies are needed to push different countries back to their previous growth paths.