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Potential for Trouble: The IMF's Estimates of Potential GDP

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  • David Rosnick

Abstract

This issue brief examines the IMF’s methodology for estimating potential GDP, and its pitfalls and problems. A number of economists have noted recent problems with overestimates of actual GDP in recent years in Greece, and the IMF’s own research has found that the multipliers associated with fiscal tightening had been underestimated. But the policy and political implications of potential GDP estimates, which are not only forecasts but also continuously revised for past estimates, may be even more important.

Suggested Citation

  • David Rosnick, 2016. "Potential for Trouble: The IMF's Estimates of Potential GDP," CEPR Reports and Issue Briefs 2016-08, Center for Economic and Policy Research (CEPR).
  • Handle: RePEc:epo:papers:2016-08
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    JEL classification:

    • A - General Economics and Teaching
    • A1 - General Economics and Teaching - - General Economics
    • A11 - General Economics and Teaching - - General Economics - - - Role of Economics; Role of Economists
    • B - Schools of Economic Thought and Methodology
    • B4 - Schools of Economic Thought and Methodology - - Economic Methodology
    • B40 - Schools of Economic Thought and Methodology - - Economic Methodology - - - General
    • B41 - Schools of Economic Thought and Methodology - - Economic Methodology - - - Economic Methodology
    • F - International Economics
    • F5 - International Economics - - International Relations, National Security, and International Political Economy
    • F53 - International Economics - - International Relations, National Security, and International Political Economy - - - International Agreements and Observance; International Organizations

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