Potential output and the output gap in Estonia - a macro model based evalutaion
AbstractThere have been several data revisions to the output statistics in Estonia during the past six years as methodologies have been harmonised. These changes are significant enough to require corrections to the earlier understanding of Estonia\'s potential economic growth rate. In this paper the latest data vintage from 2009 is used to estimate Estonia\'s potential output growth and output gap. The production function approach that has been used shows that the gap varies quite extensively, ranging from -8% in 1999 to +8% in 2007, while the average potential growth rate in 1997-2009 was around 6%. The macro model simulations expect the potential growth rate to fall in the future. The fall in the marginal productivity of production inputs makes growth slow to about 4-5% in the next five years, if there are no additional shocks to the economy
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Bibliographic InfoPaper provided by Bank of Estonia in its series Bank of Estonia Working Papers with number wp2010-03.
Date of creation: 11 Feb 2010
Date of revision: 11 Feb 2010
Postal: Estonia bld. 13, 15095 Tallinn, ESTONIA
Find related papers by JEL classification:
- E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
- F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-03-28 (All new papers)
- NEP-MAC-2010-03-28 (Macroeconomics)
- NEP-TRA-2010-03-28 (Transition Economics)
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