This site has been archived on 27/01/17

Navigation path

The website of the Directorate General for Economic and Financial Affairs has moved.

You will find all publications issued after July 2015 on the new web presence.

The production function methodology for calculating potential growth rates and output gaps

Author(s): Francesca D'Auria, Cécile Denis, Karel Havik, Kieran Mc Morrow, Christophe Planas, Rafal Raciborski, Werner Röger and Alessandro Rossi

The production function methodology for calculating potential growth rates and output gapspdf(2 MB) Choose translations of the previous link 

Summary for non-specialistspdf(87 kB) Choose translations of the previous link 

As a result of the financial crisis, cyclically corrected indicators have taken on a greater degree of significance and are firmly back at the forefront of economic policy making. This heightened level of policy interest not only reflects the anxiousness of policy makers to avoid the well-documented mistakes made in assessing the supply side impact of historical crises but is also linked with the primary role of such indicators in calculating cyclically adjusted budget balances & in designing successful "exit strategies" from the current crisis (and especially the requirement to unwind the large increases in EU public debt).

(European Economy. Economic Papers 420. July 2010. Brussels. PDF. 108pp. Tab. Graph. Bibliogr. Free.)

KC-AI-10-420-EN-N (online)
ISBN 978-92-79-14906-1 (online)
ISSN 1725-3187 (online)
doi: 10.2765/43454 (online)

JEL classification: C10, E60, O10

Economic Papers are written by the staff of the Directorate-General for Economic and Financial Affairs, or by experts working in association with them. The Papers are intended to increase awareness of the technical work being done by staff and to seek comments and suggestions for further analysis. The views expressed are the author’s alone and do not necessarily correspond to those of the European Commission.

Additional tools

  • Print version 
  • Decrease text 
  • Increase text