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Our most academic publication offers research and surveys on monetary policy, national and international developments, banking, and more. The content is written for an economically informed readership—from the undergraduate student to the PhD.

July/August 2009

Posted 2009-07-01

Projecting Potential Growth: Issues and Measurements:

President's Welcome

by James Bullard

Posted 2009-07-01

Projecting Potential Growth: Issues and Measurements:

What Do We Know (And Not Know) About Potential Output?

by Susanto Basu and John G. Fernald

Potential output is an important concept in economics. Policymakers often use a one-sector neoclassical model to think about long-run growth, and they often assume that potential output is a smooth series in the short run—approximated by a medium- or long-run estimate.

Posted 2009-07-01

Projecting Potential Growth: Issues and Measurements:

Commentary

by Rodolfo E. Manuelli

Posted 2009-07-01

Projecting Potential Growth: Issues and Measurements:

Issues on Potential Growth Measurement and Comparison: How Structural Is the Production Function Approach?

by Christophe Cahn and Arthur Saint-Guilhem

This article aims to better understand the factors driving fluctuations in potential output measured by the production function approach (PFA.) To do so, the authors integrate a production function definition of potential output into a large-scale dynamic stochastic general equilibrium (DSGE) model in a fully consistent manner and give two estimated versions based on U.S. and euro-area data.

Posted 2009-07-01

Projecting Potential Growth: Issues and Measurements:

Commentary

by Jon Faust

Posted 2009-07-01

Projecting Potential Growth: Issues and Measurements:

Parsing Shocks: Real-Time Revisions to Gap and Growth Projections for Canada

by Russell Barnett, Sharon Kozicki, and Christopher Petrinec

The output gap—the deviation of output from potential output—has played an important role in the conduct of monetary policy in Canada. This paper reviews the Bank of Canada’s definition of potential output, as well as the use of the output gap in monetary policy.

Posted 2009-07-01

Projecting Potential Growth: Issues and Measurements:

Commentary

by Gregor W. Smith

Posted 2009-07-01

Projecting Potential Growth: Issues and Measurements:

The Challenges of Estimating Potential Output in Real Time

by Robert W. Arnold

Potential output is an estimate of the level of gross domestic product attainable when the economy is operating at a high rate of resource use. A summary measure of the economy’s productive capacity, potential output plays an important role in the Congressional Budget Office (CBO)’s economic forecast and projection.

Posted 2009-07-01

Projecting Potential Growth: Issues and Measurements:

Commentary

by Robert J. Tetlow

Posted 2009-07-01

Projecting Potential Growth: Issues and Measurements:

Trends in the Aggregate Labor Force

by Kenneth J. Matheny

Trend growth in the labor force is a key determinant of trends in employment and gross domestic product (GDP). Forecasts by Macroeconomic Advisers (MA) have long anticipated a marked slowing in trend growth of the labor force that would contribute to a slowing in potential GDP growth.

Posted 2009-07-01

Projecting Potential Growth: Issues and Measurements:

Commentary

by Ellis W. Tallman

Posted 2009-07-01

Projecting Potential Growth: Issues and Measurements:

Potential Output in a Rapidly Developing Economy: The Case of China and a Comparison with the United States and the European Union

by Jinghai Zheng, Angang Hu, and Arne Bigsten

The authors use a growth accounting framework to examine growth of the rapidly developing Chinese economy. Their findings support the view that, although feasible in the intermediate term, China’s recent pattern of extensive growth is not sustainable in the long run.

Posted 2009-07-01

Projecting Potential Growth: Issues and Measurements:

Commentary

by Xiaodong Zhu

Posted 2009-07-01

Projecting Potential Growth: Issues and Measurements:

Estimating U.S. Output Growth with Vintage Data in a State-Space Framework

by Richard G. Anderson and Charles S. Gascon

This study uses a state-space model to estimate the “true” unobserved measure of total output in the U.S. economy. The analysis uses the entire history (i.e., all vintages) of selected real-time data series to compute revisions and corresponding statistics for those series.

Posted 2009-07-01

Projecting Potential Growth: Issues and Measurements:

Commentary

by Dean Croushore

Posted 2009-07-01

Projecting Potential Growth: Issues and Measurements:

Panel Discussion

by Carlos Hamilton Araujo, Seppo Honkapohja, and James Bullard


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