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July/August 2009, 
Vol. 91, No. 4
Posted 2009-07-01

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 article reviews the Bank of Canada’s definition of potential output, as well as the use of the output gap in monetary policy.