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Potential Output: Measurement Methods, "New" Economy Influences and Scenarios for 2001-2010 - A comparison of the EU-15 and the US

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  • Kieran Mc Morrow
  • Werner Roeger
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    Abstract

    This paper presents an overview of the various methodologies for estimating potential output at the macroeconomic level. Emphasis was laid on the production function approach which is used together with the univariate statistical HP filter method to produce potential output estimates for the US and the EU15 economies (as well as the individual EU Member States) from 1966-2002. The paper also assesses the role of "new" economy influences on potential growth and provides estimates of the likely contribution to past and future output capacity from this source. Finally, potential growth scenarios are given for the EU15 as a whole and the US for the period 2001-2010, with the central scenario pointing to annual average growth rates of 2 ¾% for the EU15 and 3% for the US over the next ten years.

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    File URL: http://ec.europa.eu/economy_finance/publications/publication11048_en.pdf
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    Bibliographic Info

    Paper provided by Directorate General Economic and Monetary Affairs (DG ECFIN), European Commission in its series European Economy - Economic Papers with number 150.

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    Length: 142 pages
    Date of creation: Apr 2001
    Date of revision:
    Handle: RePEc:euf:ecopap:0150

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    Keywords: macroeconomic analysis; potential growth; potential output;

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    Cited by:
    1. Karl Aiginger, 2003. "A Three Tier Strategy for Successful European Countries in the Nineties," WIFO Working Papers 205, WIFO.

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