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Estimating and Projecting Potential Output Using CBO’s Forecasting Growth Model: Working Paper 2018-03

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  • Robert Shackleton

Abstract

As part of its responsibility for producing baseline projections of the economy and the federal budget, CBO regularly produces estimates and projections of potential output, a measure of the economy’s fundamental ability to supply goods and services. The projection of potential output serves as a key input to CBO’s macroeconomic forecasts and budget projections, helping the agency maintain consistency between its projections of labor supply and capital accumulation and its projections of taxes on income from labor and capital, of federal expenditures, and of the

Suggested Citation

  • Robert Shackleton, 2018. "Estimating and Projecting Potential Output Using CBO’s Forecasting Growth Model: Working Paper 2018-03," Working Papers 53558, Congressional Budget Office.
    • Handle: RePEc:cbo:wpaper:53558
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    File URL: https://www.cbo.gov/system/files/115th-congress-2017-2018/workingpaper/53558-cbosforecastinggrowthmodel-workingpaper.pdf
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    Citations

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    Cited by:

    1. Fontanari, Claudia & Palumbo, Antonella & Salvatori, Chiara, 2020. "Potential Output in Theory and Practice: A Revision and Update of Okun's Original Method," Structural Change and Economic Dynamics, Elsevier, vol. 54(C), pages 247-266.
    2. Augustus J. Panton, 2020. "Climate hysteresis and monetary policy," CAMA Working Papers 2020-76, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
    3. Dunbar, Kwamie & Owusu-Amoako, Johnson, 2021. "The impact of hedging on risk-averse agents’ output decisions," Economic Modelling, Elsevier, vol. 104(C).
    4. Martinez, Andrew & Schibuola, Alex, 2021. "The Expectations Gap: An Alternative Measure of Economic Slack," Working Papers 11284, George Mason University, Mercatus Center.
    5. Murat Tasci, 2019. "Challenges with Estimating U Star in Real Time," Economic Commentary, Federal Reserve Bank of Cleveland, issue November.
    6. Pascal Michaillat & Emmanuel Saez, 2019. "Beveridgean Unemployment Gap," Papers 1911.05271, arXiv.org, revised Nov 2021.
    7. Rafael R. S. Guimaraes, 2022. "Deep Learning Macroeconomics," Papers 2201.13380, arXiv.org.
    8. Jeremy B. Rudd, 2022. "The Anatomy of Single-Digit Inflation in the 1960s," Finance and Economics Discussion Series 2022-029, Board of Governors of the Federal Reserve System (U.S.).
    9. R. Jason Faberman & Andreas I. Mueller & Ayşegül Şahin* & Giorgio Topa, 2020. "The Shadow Margins of Labor Market Slack," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 52(S2), pages 355-391, December.
    10. Saeed Zaman, 2021. "A Unified Framework to Estimate Macroeconomic Stars," Working Papers 21-23R, Federal Reserve Bank of Cleveland, revised 15 Aug 2022.
    11. Andreas Hornstein & Marianna Kudlyak, 2019. "Aggregate Labor Force Participation and Unemployment and Demographic Trends," Working Paper 19-8, Federal Reserve Bank of Richmond.
    12. Fatás, Antonio & Singh, Sanjay R., 2024. "Supply or demand? Policy makers’ confusion in the presence of hysteresis," European Economic Review, Elsevier, vol. 161(C).
    13. Tommaso Proietti & Marco Fioramanti & Cecilia Frale & Libero Monteforte, 2020. "A Systemic Approach to Estimating the Output Gap for the Italian Economy," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 62(3), pages 465-493, September.
    14. Peter D. Williams & Mr. Yasser Abdih & Emanuel Kopp, 2020. "Reading the Stars," IMF Working Papers 2020/136, International Monetary Fund.
    15. Josefine Quast & Maik H. Wolters, 2022. "Reliable Real-Time Output Gap Estimates Based on a Modified Hamilton Filter," Journal of Business & Economic Statistics, Taylor & Francis Journals, vol. 40(1), pages 152-168, January.
    16. Chang Liu & Yinxi Xie, 2023. "Understanding Inflation Dynamics: The Role of Government Expenditures," Staff Working Papers 23-30, Bank of Canada.
    17. Kurt Graden Lunsford, 2023. "Business Cycles and Low-Frequency Fluctuations in the US Unemployment Rate," Working Papers 23-19, Federal Reserve Bank of Cleveland.
    18. Filippo Occhino, 2019. "The Flattening of the Phillips Curve: Policy Implications Depend on the Cause," Economic Commentary, Federal Reserve Bank of Cleveland, issue July.
    19. Bruce Fallick & Christopher L. Foote, 2022. "The Impact of the Age Distribution on Unemployment: Evidence from US States," Working Papers 22-15, Federal Reserve Bank of Boston.
    20. Robert J. Hodrick, 2020. "An Exploration of Trend-Cycle Decomposition Methodologies in Simulated Data," NBER Working Papers 26750, National Bureau of Economic Research, Inc.
    21. Burger, John D. & Warnock, Francis E. & Warnock, Veronica Cacdac, 2022. "A natural level of capital flows," Journal of Monetary Economics, Elsevier, vol. 130(C), pages 1-16.
    22. Remzi Baris Tercioglu, 2020. "A sectoral approach to measuring output gap: Evidence from 20 US sectors over 1948-2019," Working Papers 2012, New School for Social Research, Department of Economics, revised Jun 2021.

    More about this item

    JEL classification:

    • E17 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Forecasting and Simulation: Models and Applications
    • E27 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Forecasting and Simulation: Models and Applications

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