Potential Output from a Euro Area Perspective
64 Pages Posted: 4 Nov 2014
Date Written: September 8, 2014
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.
Keywords: potential output, production function, output gap, structural reforms
JEL Classification: E23, E25, E32, E37, O49
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