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Potential output from a euro area perspective

Author

Listed:
  • Anderton, Robert
  • Aranki, Ted
  • Dieppe, Alistair
  • Elding, Catherine
  • Haroutunian, Stephan
  • Jacquinot, Pascal
  • Jarvis, Valerie
  • Labhard, Vincent
  • Rusinova, Desislava
  • Szörfi, Béla

Abstract

This paper reviews potential output from a euro area perspective by summarising the developments according to international institutions and assessing the impact of the crisis. The paper also considers the methodological basis for potential output estimates, and the high degree of uncertainty that surrounds them. Although it is too early to see the full effects of structural reforms implemented since 2007/08, further structural reforms are needed to support euro area potential growth, especially in view of the negative impact that population ageing is expected to have on potential growth in the future. JEL Classification: C5, E6, C62

Suggested Citation

  • Anderton, Robert & Aranki, Ted & Dieppe, Alistair & Elding, Catherine & Haroutunian, Stephan & Jacquinot, Pascal & Jarvis, Valerie & Labhard, Vincent & Rusinova, Desislava & Szörfi, Béla, 2014. "Potential output from a euro area perspective," Occasional Paper Series 156, European Central Bank.
    • Handle: RePEc:ecb:ecbops:2014156
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    File URL: http://www.ecb.europa.eu/pub/pdf/scpops/ecbop156.en.pdf
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    References listed on IDEAS

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    1. Christophe Cahn & Arthur Saint-Guilhem, 2010. "Potential output growth in several industrialised countries a comparison," Empirical Economics, Springer, vol. 39(1), pages 139-165, August.
    2. Carmen M. Reinhart & Kenneth S. Rogoff, 2009. "Varieties of Crises and Their Dates," Introductory Chapters,in: This Time Is Different: Eight Centuries of Financial Folly Princeton University Press.
    3. Carmen M. Reinhart & Kenneth S. Rogoff, 2014. "This Time is Different: A Panoramic View of Eight Centuries of Financial Crises," Annals of Economics and Finance, Society for AEF, vol. 15(2), pages 1065-1188, November.
    4. Gomes, S. & Jacquinot, P. & Pisani, M., 2012. "The EAGLE. A model for policy analysis of macroeconomic interdependence in the euro area," Economic Modelling, Elsevier, vol. 29(5), pages 1686-1714.
    5. Francesca D'Auria & Cécile Denis & Karel Havik & Kieran Mc Morrow & Christophe Planas & Rafal Raciborski & Werner Roger & Alessandro Rossi, 2010. "The production function methodology for calculating potential growth rates and output gaps," European Economy - Economic Papers 2008 - 2015 420, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    6. Claudio BorioBy & Piti Disyatat & Mikael Juselius, 2017. "Rethinking potential output: embedding information about the financial cycle," Oxford Economic Papers, Oxford University Press, vol. 69(3), pages 655-677.
    7. Athanasios Orphanides & Simon van Norden, 2002. "The Unreliability of Output-Gap Estimates in Real Time," The Review of Economics and Statistics, MIT Press, vol. 84(4), pages 569-583, November.
    8. Dieppe, Alistair & González Pandiella, Alberto & Willman, Alpo, 2012. "The ECB's New Multi-Country Model for the euro area: NMCM — Simulated with rational expectations," Economic Modelling, Elsevier, vol. 29(6), pages 2597-2614.
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    Citations

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    Cited by:

    1. Bas van Aarle, 2016. "Secular Stagnation: Insights from a New Keynesian Model with Hysteresis Effects," CESifo Working Paper Series 5797, CESifo Group Munich.
    2. Jesús Ferreiro & Catalina Gálvez & Ana González, 2015. "Fiscal Policies in the European Union during the Crisis," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 62(2), pages 131-155, June.
    3. repec:ecb:ecbops:2010161 is not listed on IDEAS
    4. repec:kap:empiri:v:45:y:2018:i:1:d:10.1007_s10663-016-9346-2 is not listed on IDEAS
    5. Igor Lebrun, 2015. "Working Paper 04-15 - Potential output growth in Belgium since the crisis - Lower and more uncertain," Working Papers 1504, Federal Planning Bureau, Belgium.
    6. Bindseil, Ulrich & Domnick, Clemens & Zeuner, Jörg, 2015. "Critique of accommodating central bank policies and the 'expropriation of the saver' - A review," Occasional Paper Series 161, European Central Bank.
    7. Breuer, Sebastian & Elstner, Steffen, 2017. "Die Wachstumsperspektiven der deutschen Wirtschaft vor dem Hintergrund des demografischen Wandels: Die Mittelfristprojektion des Sachverständigenrates," Working Papers 07/2017, German Council of Economic Experts / Sachverständigenrat zur Begutachtung der gesamtwirtschaftlichen Entwicklung.

    More about this item

    Keywords

    output gap; potential output; production function; structural reforms;

    JEL classification:

    • C5 - Mathematical and Quantitative Methods - - Econometric Modeling
    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook
    • C62 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Existence and Stability Conditions of Equilibrium

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