Advertisement

Potential Output and Demand-Led Growth

  • Antonella Palumbo
Chapter

Abstract

Potential output is generally understood as the desirable level of output, i.e., the highest which may be attained in any given situation without putting inflationary pressures upon the economy.

Keywords

Monetary Policy Total Factor Productivity Potential Output Actual Output Phillips Curve 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

Preview

Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

References

  1. Ball, L. (1996) ‘Disinflation and the NAIRU’, NBER Working Papers 5520.Google Scholar
  2. Basu, S. and Fernald, J. G. (2009) ‘What Do We Know and Not Know about Potential Output?’, Federal Reserve Bank of San Francisco Working Paper 2009–05, March.Google Scholar
  3. Baxter, M. and King, R.G. (1995) ‘Measuring Business Cycles Approximate Bandpass Filters for Economic Time Series’, NBER Working Papers 5022.Google Scholar
  4. Beveridge, S. and Nelson, C. R. (1981) ‘A new approach to decomposition of economic time series into permanent and transitory components with particular attention to measurement of the “business cycle”’, Journal of Monetary Economics, 7: 151–74.CrossRefGoogle Scholar
  5. Billmeier, A. (2004) ‘Ghostbusting: Which Output Gap Measure Really Matters?’, IMF Working Papers 146, updated version in (2009), International Economics and Economic Policy, 6: 391–419.CrossRefGoogle Scholar
  6. Blanchard, O. and Katz, L. F. (1996) ‘What We Know and do Not Know about the Natural Rate of Unemployment’, NBER Working Papers 5822.Google Scholar
  7. Blanchard, O. and Summers, L. (1987) ‘Hysteresis and the European Unemployment Problem’, NBER Working Papers W1950.Google Scholar
  8. Boone, L. (2000) ‘Comparing Semi-structural Methods to estimate Unobserved Variables’, OECD Economics Department Working Papers 240.Google Scholar
  9. Carlin, W. and Soskice, D. (1990) Macroeconomics and the Wage Bargain (Oxford: Oxford University Press).Google Scholar
  10. Ciccone, R. (1986) ‘Accumulation and capacity utilisation: some critical considerations on Joan Robinson’s Theory of Distribution’, Political Economy, 2: 17–36.Google Scholar
  11. Congressional Budget Office (2004) ‘A Summary of Alternative Methods for Estimating Potential GDP’, Background Paper, March, http://www.cbo.gov/.Google Scholar
  12. Cotis, J. P., Elmeskov, J. and Mourougane, A. (2005) ‘Estimates of Potential Output: Benefits and Pitfalls from a Policy Prospect’, in L. Reichlin (ed.), The Euro Zone’s Business Cycle: Stylised Facts and Measurement Issues, CEPR.Google Scholar
  13. Council of Economic Advisors (1962) Economic Report of the President (Washington: US Government Printing Office).Google Scholar
  14. Cross, R. (ed.) (1995) The Natural Rate of Unemployment (Cambridge: Cambridge University Press).Google Scholar
  15. De Masi, P. R. (1997) ‘IMF Estimates of Potential Output: Theory and Practice’, IMF Working Papers 177.Google Scholar
  16. DeLong, B. (2002) ‘Forecasting growth and unemployment’, July, http://www.j-bradford-delong.net/Google Scholar
  17. Denis, C., McMorrow, K. and Roger, W. (2002) ‘Production Function Approach to Calculating Potential Growth and Output Gaps - Estimates for the EU Member States and the US’, European Commission, Directorate-General for Economic and Financial Affairs, Economic Papers 176.Google Scholar
  18. European Central Bank (2009) Monthly Bulletin, July.Google Scholar
  19. European Central Bank (2011) Monthly Bulletin, November.Google Scholar
  20. European Commission (2009) ‘Impact of the Current Economic and Financial Crisis on Potential Output’, European Economy Occasional Papers 49, June.Google Scholar
  21. Fabiani, S. and Mestre, R. (2001) ‘A System Approach for Measuring the Euro Area NAIRU’, ECB Working Papers 65.Google Scholar
  22. Franz, W. (2005) ‘Will the (German) NAIRU Please Stand Up?’, Zentrum für Europäische Wirtschaftsforschung (Centre for European Economic Research), Discussion Paper n. 03–35.Google Scholar
  23. Galbraith, J. K. (1997) ‘Time to Ditch the NAIRU’, Journal of Economic Perspectives, 11: 93–108.CrossRefGoogle Scholar
  24. Galí, J. and Gertler, M. (2007) ‘Macroeconomic Modeling for Monetary Policy’ Journal of Economic Perspectives, 21: 25–46CrossRefGoogle Scholar
  25. Gali, J., Smets, F. and Wouters, R. (2011) ‘Unemployment in an Estimated New Keynesian Model’, NBER Working Papers 17084, National Bureau of Economic Research.Google Scholar
  26. Garegnani, P. (1992) ‘Some Notes for an Analysis of Accumulation’, in J. Halevi, D. Laibman and E. Nell (eds), Beyond the Steady-state (Basingstoke and London: Macmillan).Google Scholar
  27. Giorno, C., Richardson, P., Roseveare, D. and van den Noord, P. (1995) ‘Potential Output, Output Gaps and Structural Budget Balances’, OECD Economic Studies 24.Google Scholar
  28. Gordon, R. J. (1989) ‘Hysteresis in history: was there ever a Phillips curve?’, American Economic Review, 79: 220–5.Google Scholar
  29. Gordon, R.J. (1997) ‘The time-varying NAIRU and its implications for economic policy’, Journal of Economic Perspectives, 11: 11–32.CrossRefGoogle Scholar
  30. Gros, D., Alcidi, C., Biggs, M., Mayer, T., Van Ark, B. (2010) ‘Forum: The Impact of the Financial Crisis on the Real Economy’; Intereconomics, 45(1), (January/February): 4–20.CrossRefGoogle Scholar
  31. Hodrick, R. J. and Prescott, E. C. (1981) ‘Post-war U.S. Business Cycles: An Empirical Investigation’, Northwestern University Discussion Paper 451, re-published in Journal of Money, Credit and Banking, 29 (1997): 1–16.Google Scholar
  32. International Monetary Fund (2006) World Economic Outlook, April.Google Scholar
  33. Jenkinson, T. J. (1988) ‘The NAIRU: Statistical Fact or Theoretical Straitjacket?’, in R. Cross (ed.), Unemployment, Hysteresis and the Natural Rate Hypothesis (Oxford: Blackwell).Google Scholar
  34. Kaldor, N. (1985) Economics without Equilibrium (Armonk, NY: Sharpe).Google Scholar
  35. Karanassou, M., Sala, H. and Snower, D. (2003) ‘The European Phillips curve: Does the NAIRU exist?’, Applied Economics Quarterly, 49(2): 93–121.Google Scholar
  36. Kydland, F. and Prescott, E. (1982) ‘Time to build and aggregate fluctuations’, Econometrica, 50: 1345–1370.CrossRefGoogle Scholar
  37. Landes, D. (1990) ‘Why are we so rich and they so poor?’, American Economic Review, 80: 1–13.Google Scholar
  38. Laxton, D. and Tetlow, R. (1992) ‘A simple multivariate filter for the measurement of potential output’, Technical Report 59, Bank of Canada.Google Scholar
  39. Layard, R., Nickell, S. and Jackman, R. (1991) Unemployment, Macroeconomic Performance and the Labour Market (Oxford: Oxford University Press).Google Scholar
  40. Nickell, S. (1997) ‘Unemployment and labor market rigidities: Europe versus North America’, Journal of Economic Perspectives, 11: 55–74.CrossRefGoogle Scholar
  41. Okun, A. (1962) ‘Potential GNP: its measurement and significance’, Cowles Foundation Paper 190.Google Scholar
  42. Palumbo, A. and Trezzini, A. (2003) ‘Growth without normal capacity utilisation’, European Journal of the History of Economic Thought, 10: 109–35.CrossRefGoogle Scholar
  43. Palumbo, A. (2010) ‘La teoria del salario monetario di Phillips e la curva di Phillips’, in G. Bonifati and A. Simonazzi, Il ritorno dell’economia politica. Saggi in ricordo di Fernando Vianello (Roma: Donzelli): pp. 79–102.Google Scholar
  44. Pesaran, H. and Smith, R. (1995) ‘The Natural Rate Hypothesis and its Testable Implications’, in R. Cross (ed.), The Natural Rate of Unemployment: Reflections on 25 years of the Hypothesis (Cambridge: Cambridge University Press): pp. 203–30.CrossRefGoogle Scholar
  45. Prescott, E. (1986) ‘Theory Ahead of Business Cycle Measurement’, Federal Reserve Bank of Minneapolis Quarterly Review, Fall.Google Scholar
  46. Richardson, P., Boone, L., Giorno, C., Meacci, M., Rae, D. and Turner, D. (2000) ‘The Concept, Policy Use and Measurement of Structural Unemployment: Estimating a Time-Varying NAIRU across 21 OECD Countries’, OECD Economics Department Working Papers 250.Google Scholar
  47. Schreiber, S. and Wolters, J. (2007) ‘The long-run Phillips curve revisited: is the NAIRU framework data-consistent?’, Journal of Macroeconomics, 29: 355–67.CrossRefGoogle Scholar
  48. Serrano, F. (1995) ‘Long-period effective demand and the Sraffian supermultiplier’, Contributions to Political Economy, 14: 67–90.Google Scholar
  49. Serrano, F. (2006) ‘Mind the Gap: Hysteresis, Inflation Dynamics and the Sraffian Supermultiplier’, Universidade Federal de Rio de Janeiro, mimeo.Google Scholar
  50. Setterfield, M. (ed.) (2002) The Economics of Demand-led Growth (Cheltenham: Edward Elgar).Google Scholar
  51. Sims, C. A., Edge, R.M., Gürkaynak, R. S. and Reis, R. (2010) ‘How Useful Are Estimated DSGE Model Forecasts for Central Bankers?’ Brookings Papers on Economic Activity, Fall, 209–59.Google Scholar
  52. Solow, R. M. (1986) ‘Unemployment: getting the questions right’, Economica, 53, suppl., S23-S34.CrossRefGoogle Scholar
  53. Solow, R. M. (2000) ‘Unemployment in the United States and in Europe. A contrast and the reasons’, CESifo Working Paper Series 231.Google Scholar
  54. Staiger, D., Stock, J. H. and Watson, M. W. (1997) ‘The NAIRU, unemployment and monetary policy’, Journal of Economic Perspectives, 11: 33–59.CrossRefGoogle Scholar
  55. Stiglitz, J. (1997) ‘Reflections on the natural rate hypothesis’, Journal of Economic Perspectives, 11: 3–10.CrossRefGoogle Scholar
  56. Stirati, A. (2001) ‘Inflation, unemployment and hysteresis: an alternative view’, Review of Political Economy, 13: 427–51.CrossRefGoogle Scholar
  57. Tobin, J. (1995) ‘The Natural Rate as New Classical Macroeconomics’, in R. Cross (ed.), The Natural Rate of Unemployment (Cambridge: Cambridge University Press).Google Scholar
  58. Vetlov, I., Hlédik, T., Jonsson, M., Kucsera, H. and Pisani, M. (2011) ‘Potential Output in DSGE Models’, ECB Working Paper 1351.Google Scholar
  59. Woodford, M. (2003) Interest and Prices: Foundations of a Theory of Monetary Policy (Princeton, NJ: Princeton University Press).Google Scholar

Copyright information

© contributors 2013

Authors and Affiliations

  • Antonella Palumbo

There are no affiliations available

Personalised recommendations