Geared for progress Nov 21, 2009
After all, thats almost on par with the countrys potential output growth of 6%, according to most economists. It is not impossible. (The Star Online, Malaysia -- Business)
EU's GDP set to fall 4% in 2009: official forecast Nov 4, 2009
" A further restraining factor is the estimated adverse impact of the financial crisis on potential output. Thus, following an initial upturn, GDP growth in the EU and euro area was forecast to ease somewhat before regaining ground in the second half of 2010 and beyond. Inflation in the EU and euro area was expected to rebound somewhat from its current low level, but would remain subdued over the forecast horizon. "HICP inflation is projected to average slightly over one percent in 2010 and... (Xinhuanet, China)
Kingdom of the Netherlands—The Netherlands 2009 Article IV Consultation: Preliminary Conclusions Nov 3, 2009
Aging pressures are compounded by the decline in the robust balance over 2008-10, the large increase in public debt, and a likely contraction in potential output as a result of the crisis ... The level of potential output has probably been severely curtailed by the crisis ... These policies ought to be couched in a longer-run framework strengthening financial stability, ensuring fiscal sustainability, and adopting structural reforms to reinvigorate potential output. (IMF News)
US bond yields Oct 31, 2009
The wide gap between actual and potential output as factories and businesses run well below capacity suggests little potential for upward pressure on prices and wages. Stimulus spending and quantitative easing have not started a new boom. (FT.com -- Markets)
* Is stimulus still necessary? Oct 28, 2009
This is the difference between an economys actual output and its potential output. If actual output is below potential output, this means that total spending is insufficient to buy what the economy can produce ... This will raise actual output to the level of potential output, thereby closing the output gap. (Taipei Times, Taiwan -- World)
DeGregorio Keeps Chile's Overnight Rate at Record Low 0.5% for Third Month Oct 14, 2009
The shrinking economy has opened up a gap between actual output and potential output, the central bank said in a monetary policy report last month. Pushing for growth faster than 4. (Bloomberg -- Latin America)
De Gregorio May Keep Chile's Rate at Record Low 0.5% to Safeguard Recovery Oct 13, 2009
The shrinking economy has opened up a gap between actual output and potential output, the central bank argued in a monetary policy report last month. Chiles economy can probably grow 4 percent to 4. (Bloomberg -- Latin America)
Bullard Says Fed Should Adopt Quantitative Rule for Purchases of Assets Oct 12, 2009
In his speech, Bullard also said economists shouldnt put too much emphasis on the so-called output gap, or the difference between the economys actual and potential output, when assessing the potential for inflation. I am concerned about a popular narrative in use today -- the narrative being that the output gap must be large since the recession is so severe, he said. (Bloomberg -- US)
World economy: A long climb Oct 8, 2009
If the shortfall in demand persists it can do lasting damage to supply, reducing the level of potential output (scenario 2) or even its rate of growth (scenario 3) ... A financial breakdown could do lasting damage to the growth in potential output as well as to its level. (The Economist)
A Threat to Global Recovery: Too Many Factories Oct 7, 2009
To measure excess capacity, economists use a metric called the "output gap," defined as the difference between the potential output of a given economy and what is actually being produced (including services). The Organization for Economic Cooperation and Development (OECD) is projecting that, despite global production cutbacks, the situation is actually getting worse because the recovery will be weak. (Time.com)
Experts hope swine flu will spur universal jab Oct 3, 2009
Flu experts from the World Health Organization, Swiss drug giant Novartis AG, the U.S. National Institutes of Health and others noted that the arrival of H1N1 had prompted a jump in the potential output of vaccine manufacturing to 900 million doses from 400 million. But in a letter to the journal Science, they urged drug and health industries to be more proactive in developing and distributing vaccines and in particular to speed up the search for a universal flu vaccine. (MSNBC -- Health)
Press Release: IMF Says European Economic Recovery to be Fragile and Calls for Policy Action to Secure a Solid Rebound Oct 3, 2009
Chapter 2 of the 2009 October REO, entitled The Crisis and Potential Output, looks at the impact of the crisis on Europe s potential growth and concludes that financial sector difficulties, weak investment, and long spells of unemployment are likely to hold back potential growth over the next few years ... Chapter 3 of the REO, entitled Implications of the Fall in Potential Output for Macroeconomic Policies, concludes that the decline in potential output and the surrounding uncertainty... (IMF News)
transcript of Press Briefing on the International Monetary Fund's World Economic Outlook by Olivier Blanchard, IMF Economic Counsellor and Director of the Research Department Oct 2, 2009
One of the studies we have done in conjunction with the World Economic Outlook in the so-called analytical chapters was to look at the effect of banking and financial crises on potential output and potential output growth after the crisis. The general conclusion is that crises lead to a permanent loss in output of some amount which has to be taken into account. (IMF News)
Plosser: Fed Will be Aggressive Oct 1, 2009
Slack refers to the gap between potential output and current levels of production and employment. A lesson from the high inflation of the 1970s, he said, was that if inflation expectations become unanchored, inflation can take hold regardless of the amount of economic slack. (Newsmax)
Fed's Plosser: Policy Shift May Need to Be Aggressive Sep 30, 2009
Slack refers to the gap between potential output and current levels of production and employment. 1. (ABC News -- Wire)
Experts Talk Stocks, the Economy, and the Fed's Next Move Sep 25, 2009
Although the financial crisis will have an impact on the potential output of the U.S. economy, it is more likely to be a one-off effect on the level of potential output than a permanent hit to potential growth. As evidence of this view, 1) economic theory suggests temporary rather than permanent effects on potential growth; 2) detailed empirical studies have found evidence of a one-time hit from financial crises but no consistent impact on trend growth; 3) recent U.S. productivity performance... (BusinessWeek)
Transcript of the IMF’s Press Briefing on World Economic Outlook: Anyaltic Chapters 3 and 4 Sep 23, 2009
The second topic that we chose is the effects of the crisis, not on output in the short run but on output in the medium run, on what we call potential output. And, there s a question of: Are we going to return to the same old trend. (IMF News)
Global Outlook: So far, so good on recovery Sep 3, 2009
Observers have pointed out, though, that Germany is still substantially below its potential output. France is also substantially below potential output, though not as deep as Germany. (India Times)
Oil rally takes a breather Aug 20, 2009
Traders are also keeping an eye on storms in the Atlantic Basin as any potential output disruption could boost prices. But there was no immediate threat seen to US oil installations in the Gulf of Mexico, home to a quarter of US oil output and 15 per cent of its natural gas production. (Sydney Morning Herald -- Business)
* Recovery needs balance: economist Aug 20, 2009
One possible end result of the global crisis: a permanently lower potential output, he said. This story has been viewed 228 times. (Taipei Times, Taiwan -- World Business)
It's a recovery, but abnormally slow, says IMF Aug 20, 2009
The end result of the global crisis was possibly a permanently lower level of potential output, he said. Telegraph, London;Agence France-Presse. (Sydney Morning Herald -- World)
The U.S. economy will experience a U-shaped recovery and the recession will come to an end this year, a leading U.S. economist said recently. • Global economic recovery requires delicate sustaining acts Aug 19, 2009
"Growth will not be quite strong enough to reduce unemployment, which is not expected to crest until some time next year," he said, "in nearly all countries, the costs of the crisis have added to the fiscal burden, and higher taxation is inevitable. All this means that we may not go back to the old growth path, that potential output may be lower than it was before the crisis.". Since the world economy is on the track of recovery, the key question, then, is what will sustain the recovery. (Xinhuanet, China)
Global recovery requires rebalancing act: IMF economist Aug 19, 2009
The end result of the global crisis: possibly a permanently lower potential output, he said. Blanchard said the IMF's upcoming edition of the twice-yearly World Economic Outlook will cover 88 banking crises over the past four decades in a wide range of countries. (Yahoo! Asia News)
Oil rises after surge on US stock draw Aug 19, 2009
Traders are also keeping an eye on storms in the Atlantic Basin, as any potential output disruption could boost prices, but there was no immediate threat seen to U.S oil installations in the Gulf of Mexico. The region is home to a quarter of US oil output and 15 per cent of its natural gas production. (Sydney Morning Herald -- Business)
Global economic recovery 'has started' Aug 19, 2009
The end result of the global crisis: possibly a permanently lower potential output, Blanchard said. Blanchard said the IMF's upcoming latest edition World Economic Outlook will cover 88 banking crises over the past four decades in a wide range of countries. (Sydney Morning Herald -- Business)
IMF says global recovery requires US, Asia rebalancing Aug 19, 2009
That would result in more US imports, which would help sustain world recovery," the top economist at the 186-nation institution said. China may be willing to pursue that "because it may well be in its own interest," said the economist, but other emerging market Asian countries that run large current account surpluses have weaker incentives than China to boost internal demand. Blanchard said that Asia appeared the best-placed to tip the trade balance. "If rebalancing is to come soon, it probably... (Channelnewsasia.com)
Public Information Notice: IMF Executive Board Concludes 2009 Article IV Consultation with France Aug 1, 2009
Risks are tilted to the downside, and the crisis could also dampen potential output growth, calling for continued progress with the structural reform agenda ... Potential output and output gap. (IMF News)
Fed's Yellen: Rates Could Be Near Zero for Years Jul 1, 2009
"My staff has looked at 12 different ways to calculate the output gap," and every one points to a large gap between current and potential output, Yellen told reporters after a speech in San Francisco. Bets in futures markets on a rate increase as soon as late 2009 are "jumping the gun," she said. (ABC News -- Wire)
At 8%, India to grow fastest in '10: WB Jun 23, 2009
At 8%, India to grow fastest in '10: World Bank- Indicators-Economy-News-The Economic Times. At 8%, India to grow fastest in '10: World Bank23 Jun 2009, 0139 hrs IST, ET Bureau. (India Times)
Unemployment Is A Killer Disease Jun 20, 2009
In other words, actual productivity of the country is below its potential output as a result of waste of human resources. People work abroad and remit their relatives in the country and we become very happy to computer remittances and add it to our national incomes. (Ghana Web, Ghana)
Sweden -- 2009 Article IV Consultation, Concluding Statement of the IMF Mission Jun 16, 2009
Furthermore, plausible estimates of potential output yield widely varying estimates of the structural balance and the fiscal outlook, and it is unclear how much public debt will rise due to financial sector rescue operations that may prove to be necessary. In addition, the stabilizers are large, the multipliers are small, and with estimates of medium-term potential output growth being lowered globally, the long run fiscal strength apparent at the outset of the crisis will need to be reassessed. (IMF News)
The government bond glut May 28, 2009
That's why the argument beloved of central bankers, that inflation is impossible while there are is an "output gap" between actual and potential output, is so erroneous. Anyone who experienced the 1970s, or those under 40 who were paying attention in economic history class, will already know that idea to be bunkum. (Asia Times Online)
Economics focus: Damage assessment May 15, 2009
The IT-induced productivity revolution, which sent potential output soaring at the end of the 1990s, has waned ... On the plus side, well-targeted government spending on, say, infrastructure or education could boost potential output, while the huge wealth that Americans have lost may induce more of them to work for longer ... But the process was not irreversible; Adam Posen of the Peterson Institute has argued that by the late 1990s Japan s potential output had risen modestly, thanks to... (The Economist)
U.S. may face years of sluggish economic growth May 8, 2009
Falling potential output has implications for everything from job creation and stock prices to the funding of government-entitlement programs such as Social Security ... Even before widespread dislocations caused by the financial crisis, dips in each major component of potential output growth were depressing the economy's long-run possibilities ... Fed officials in early 2000 anticipated potential output growing at an annual rate of 4%, up sharply from just 2. (USA Today -- Money)
Flu and the global economy: The butcher's bill May 1, 2009
In other words, it is an estimate of the effect on the potential output of the American economy. Because of the global slump, many more people are already out of work than in normal times. (The Economist)
Output gap theory is squishy concept for Fed to lean on Apr 20, 2009
The other theory of inflation, popular among Keynesian economists and Phillips Curve advocates, is something called the output gap, or the difference between the economy's actual and potential output. The economy's potential growth rate is circumscribed by the growth in the labour force and productivity. (Business Report, South Africa)
Kohn Says Fed Can Prevent Inflation Surge Apr 19, 2009
"If expectations are not anchored -- if they vary in response to our actions or to persistent gaps between actual and potential output -- inflation itself will follow," he said. On Friday, a survey-based forecast of one-year inflation expectations, from the University of Michigan, jumped surprisingly to 3 percent in April from 2 percent in March. (ABC News -- Wire)
Patheon Inc. Expands Toronto Facility, Creates Dedicated Space for Oral Contraceptives Production Apr 17, 2009
The expansion adds 10,000 square feet of GMP space dedicated to the production of oral contraceptives with a potential output of 1. 3 billion tablets. (Canada Newswire)
Inflation Doves Put Faith in Output-Gap Religion: Caroline Baum Apr 17, 2009
The other theory of inflation, popular among Keynesian economists and Phillips Curve advocates, is something called the output gap, or the difference between the economys actual and potential output ... Because of the likely persistence of the various factors holding down economic activity, CBO does not expect the output gap --- the difference between actual and potential output of goods and services --- to close fully until about 2014, according to CBO.. (Bloomberg -- Columnists)
Croatia—2009 Article IV Consultation, Concluding Statement Apr 10, 2009
Experience with past financial crises suggests that the risk of a permanent loss in potential output is considerable. To achieve growth rates of 4-5 percent over the medium-term in an environment of reduced capital inflows competitiveness of the economy needs to improve. (IMF News)
Press Release: Statement by the IMF Staff Mission to Serbia Mar 27, 2009
The program will also stress the need to maintain prudent monetary policy aimed at containing inflation, and to kick-start long-delayed structural reforms to boost the economy s potential output. The authorities will also seek further financial support from other international financial institutions and donors during this difficult period. (IMF News)
A Bank Bailout That Works Mar 7, 2009
The full costs of those mistakes include not just the $700 billion bailout but the almost $3 trillion shortfall between the economy's potential output and its actual output resulting from the crisis. Since we are not forcing banks to pay these full costs imposed on society, we should hear no complaints from them about paying for the much smaller direct costs of the bailout. (CBS News)
* Cooperation and investment in poor regions are key to recovery Feb 26, 2009
Yet this will occur too slowly to prevent a rapid rise in unemployment and a massive shortfall of production relative to potential output. The world therefore needs to stimulate other kinds of spending. (Taipei Times, Taiwan -- Business)
Transcript of a conference call with Ashoka Mody, Assistant Director, European Department, on the release of the 2008 Article IV consultation with Germany Feb 9, 2009
But perhaps in some short-run sense the potential output of Germany has at least for the next 3 to 5 years been scaled down from what it was in the last phases of the upswing that we saw until mid-2007. IMF EXTERNAL RELATIONS DEPARTMENT. (IMF News)
Press Release: Statement at the Conclusion of the Visit by IMF Director Masood Ahmed to Georgia Feb 9, 2009
The emergence of large output gaps (relative to potential output) will put strong downward pressure on inflation globally. Many governments that have fiscal space have announced stimulus packages to boost their economies and deal with credit strains. (IMF News)
The loopy mendacity of Grover Norquist Feb 7, 2009
To the extent that people hold their wealth in the form of government bonds rather than in a form that can be used to finance private investment, the increased government debt would tend to "crowd out" private investment -- thus reducing the stock of private capital and the long-term potential output of the economy. So far, the CBO bombshell hasn't excited much commentary in the econoblogosphere, which is somewhat surprising, since this is precisely the kind of thing that gets economists all hot... (Salon)
