Robustness of the Trend-Cycle Decomposition of Total Factor Productivity in EUCAM

Francesca D'Auria, Christophe Planas, Rafal Raciborski, Alessandro Rossi and Anna Thum-Thysen

No 198, European Economy - Discussion Papers from Directorate General Economic and Financial Affairs (DG ECFIN), European Commission

Abstract: The EU’s Commonly Agreed Methodology (EUCAM) is used by the European Commission to estimate potential output and the output gap in order to appraise the productive capacity and the cyclical position of the EU economies. This paper assesses the robustness of the decomposition between trend and cyclical total factor productivity, two quantities involved in EUCAM which are notoriously difficult to disentangle in real-time. In 2010 EUCAM was extended to incorporate additional information about capacity utilisation in this detrending. The robustness of the trend-cycle decomposition of total factor productivity is assessed with respect to variations in the prior distribution of model parameters, in the set of indicators used to proxy capacity utilisation, and in the assumption of cyclical symmetry. The analysis shows that EUCAM is reasonably robust to the departures in model assumptions examined.

JEL-codes: C52 D24 E32 (search for similar items in EconPapers)
Pages: 36 pages
Date: 2024-01
New Economics Papers: this item is included in nep-eec and nep-eff
References: Add references at CitEc
Citations:

Downloads: (external link)
https://economy-finance.ec.europa.eu/publications/ ... roductivity-eucam_en (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:euf:dispap:198

Access Statistics for this paper

More papers in European Economy - Discussion Papers from Directorate General Economic and Financial Affairs (DG ECFIN), European Commission Contact information at EDIRC.
Bibliographic data for series maintained by ECFIN INFO ().