CALCULATION OF CAPITAL-TO-OUTPUT RATIO IN A PRODUCTION FUNCTION BY ESTIMATING POTENTIAL OUTPUT AND OUTPUT GAP: THE CASE FOR THE CZECH REPUBLIC AND SLOVAKIA

Dana Kloudová ()
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Dana Kloudová: University of Economics, Faculty of Economics and Public Administration

No 3206128, Proceedings of Economics and Finance Conferences from International Institute of Social and Economic Sciences

Abstract: One of the most used methods of estimation of potential output and output gap, used by many national and international organisations, is a production function. The aim of this paper is to study the impact of method of computation capital-to-output ratio on results of estimation of output gap and potential output, which are very important, but not measurable. We used two methods of computation. The first one was simple: we set it up constant. The second one was calculated according to a sophisticated model. The results of this paper have shown that using variable capital-to-output ratio will bring not very different results from using a constant one. These results were confirmed both for Czech economy and Slovak economy.

Keywords: production function; capital-to-output ratio; potential output; HP filter (search for similar items in EconPapers)
JEL-codes: E22 E24 E32 (search for similar items in EconPapers)
Pages: 15 pages
Date: 2016-03
New Economics Papers: this item is included in nep-mac
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Published in Proceedings of the Proceedings of the 5th Economic & Finance Conference, Miami, Mar 2016, pages 150-164

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Persistent link: https://EconPapers.repec.org/RePEc:sek:iefpro:3206128

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