The EU’s Commonly Agreed Production Function Methodology for Estimating Potential Output (EUCAM)

Pedro Arévalo, Francesca Crucitti, Francesca D’Auria, Björn Döhring, Christoph Maier, Kieran Mc Morrow, Christophe Planas, Alessandro Rossi and Anna Thum-Thysen

No 256, European Economy - Discussion Papers from Directorate General Economic and Financial Affairs (DG ECFIN), European Commission

Abstract: Potential output is a key measure to assess an economy’s productive capacity and cyclical position. This paper describes the current version of the EU’s commonly agreed methodology (EUCAM) for estimating and projecting potential output up to 50 years ahead (T+50). On top of providing an estimation framework for unobservable potential output, this toolset covers three main projection horizons, with each of them having their own features: the short run based on the European Commission’s macroeconomic forecasts (T+2), the medium run extending the observed trends (T+10) and the long run which brings in the notion of intra-EU convergence (T+50). Compared with previous papers on EUCAM, there has been the significant addition of the T+11 to T+50 horizon. The current version of this extension paves the way for providing a solid basis for the purpose of the European Commission’s 2027 Ageing Report and related work streams.

JEL-codes: C10 C87 E60 O10 (search for similar items in EconPapers)
Pages: 76 pages
Date: 2026-07
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Persistent link: https://EconPapers.repec.org/RePEc:euf:dispap:256

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