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Measures of Potential Output: An Application to Israel

Fabio Scacciavillani and Phillip Swagel

No 1999/096, IMF Working Papers from International Monetary Fund

Abstract: This paper estimates measures of potential output for Israel, with the aim of providing evidence on whether the recent growth slowdown is principally a cyclical slowdown or a structural shift toward a slower growth path after the dramatic developments associated with the years of heavy immigration. Israel poses a challenge because traditional methods of measuring potential output assume relatively stable conditions over an extended period of time. We employ five methodologies to derive estimates and find that four of the measures imply the slowdown stems largely from reduced growth of potential output rather than a cyclical slowdown.

Keywords: WP; HP filter; production function; potential output; output gap; wavelets analysis; give output gaps; implied output gap; production function methodology; price level; output gaps from the wavelet; output gap in the HP filter; rate of inflation; Production growth; Inflation; Business cycles (search for similar items in EconPapers)
Pages: 28
Date: 1999-07-01
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Handle: RePEc:imf:imfwpa:1999/096