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Potential Output in Canada: 2019 Reassessment

Author

Listed:
  • Dany Brouillette
  • Julien Champagne
  • Carol Khoury
  • Natalia Kyui
  • Jeffrey Mollins
  • Youngmin Park

Abstract

Potential output is expected to grow on average at 1.8 per cent over 2019–21 and at 1.9 per cent in 2022. While the contribution of trend labour input to potential output growth is expected to decrease between 2019 and 2022, the contribution of trend labour productivity is projected to increase. Relative to the April 2018 reassessment, the profile for potential output growth rates is similar, albeit revised slightly down in 2020 and 2021. Underlying this new profile are negative revisions to the business investment outlook relative to April 2018 that are mostly offset by stronger projections for population growth. Based on various alternative scenarios, the range for potential output growth estimates widens from 1.5 to 2.1 per cent in 2019 to 1.3 to 2.5 per cent in 2022.

Suggested Citation

  • Dany Brouillette & Julien Champagne & Carol Khoury & Natalia Kyui & Jeffrey Mollins & Youngmin Park, 2019. "Potential Output in Canada: 2019 Reassessment," Staff Analytical Notes 2019-10, Bank of Canada.
    • Handle: RePEc:bca:bocsan:19-10
    DOI: 10.34989/san-2019-10
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    References listed on IDEAS

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    1. International Monetary Fund, 2018. "Malta: 2017 Article IV Consultation-Press Release; Staff Report," IMF Staff Country Reports 2018/019, International Monetary Fund.
    2. Audra J. Bowlus & Chris Robinson, 2012. "Human Capital Prices, Productivity, and Growth," American Economic Review, American Economic Association, vol. 102(7), pages 3483-3515, December.
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    Citations

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    Cited by:

    1. Thomas J. Carter & Xin Scott Chen & José Dorich, 2019. "The Neutral Rate in Canada: 2019 Update," Staff Analytical Notes 2019-11, Bank of Canada.
    2. Thomas J. Carter & Xin Scott Chen & José Dorich, 2019. "Le taux neutre au Canada : mise à jour de 2019," Staff Analytical Notes 2019-11fr, Bank of Canada.
    3. Fares Bounajm & Jean-Philippe Cayen & Michael Francis & Christopher Hajzler & Kristina Hess & Guillaume Poulin-Bellisle & Peter Selcuk, 2019. "Assessing Global Potential Output Growth: April 2019," Staff Analytical Notes 2019-13, Bank of Canada.
    4. Dany Brouillette & Julien Champagne & Julien McDonald-Guimond, 2020. "Potential output in Canada: 2020 reassessment," Staff Analytical Notes 2020-25, Bank of Canada.

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    Keywords

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    JEL classification:

    • E00 - Macroeconomics and Monetary Economics - - General - - - General
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • 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
    • E37 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Forecasting and Simulation: Models and Applications
    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook

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