Alternative Methods of Estimating Potential Output and the Output Gap: An Application to Sweden

Sweta Saxena and Valerie Cerra

No 2000/059, IMF Working Papers from International Monetary Fund

Abstract: This paper reviews a number of different methods that can be used to estimate potential output and the output gap. Measures of potential output and the output gap are useful to help identify the scope for sustainable noninflationary growth and to allow an assessment of the stance of macroeconomic policies. The paper then compares results from some of these methods to the case of Sweden, showing the range of estimates.

Keywords: WP; production function; economic theory; Sweden; Business Cycles; Output Gap; Potential Output; Detrending; Vector Autoregression; Unobserved Components Models; production function approach; HP filter; demand shock; constructed output gap; output gap estimate; price level; Unemployment; Inflation; Unemployment rate (search for similar items in EconPapers)
Pages: 33
Date: 2000-03-01
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Citations: View citations in EconPapers (93)

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