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Odhad potenciálneho produktu a produkčnej medzery v slovenských podmienkach
[Estimation of potential product and output gap in slovak conditions]

Author

Listed:
  • Emília Zimková
  • Jaroslav Barochovský

Abstract

The efficiency of macroeconomic policies depends on adequate business cycle approximation. Given that potential output and the output gap (the difference between actual and potential output) are not directly observable, their values need to be estimated using alternative statistical, structural, and combined techniques. In this paper the Hodrick-Prescott filter and the Cobb-Douglass production function has been applied on the Slovak conditions. The pross and coins of both methods are analysed. The Hodrick-Prescott filter does not capture the structural changes, which were significant especially in the first half of analysed period. Thus the Cobb-Douglass production function seems to be more appropriate. It enables to detect particular factors of potential output growth as technological progress, capital and labour. Despite of potential shortcomings, this approach is still widely used by international institutions, governments and researchers.

Suggested Citation

  • Emília Zimková & Jaroslav Barochovský, 2007. "Odhad potenciálneho produktu a produkčnej medzery v slovenských podmienkach
    [Estimation of potential product and output gap in slovak conditions]
    ," Politická ekonomie, University of Economics, Prague, vol. 2007(4), pages 473-489.
  • Handle: RePEc:prg:jnlpol:v:2007:y:2007:i:4:id:609:p:473-489
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    More about this item

    Keywords

    monetary policy; output gap; potential output; Hodrick-Prescot filter; Cobb-Douglas production funct;

    JEL classification:

    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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