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Assessing the Potential Output for Switzerland: Determinants, Trends and Drivers

Author

Listed:
  • Sarah Fischer

    (Short Term Economic Analyses)

  • Christian Glocker

    (Austrian Institute of Research)

  • Serguei Kaniovski

    (Austrian Institute of Research)

  • Philipp Wegmüller

    (Short Term Economic Analyses)

Abstract

Based on a novel data set for the productive capital stock and labor supply, we present a quarterly estimation of the Swiss potential output. We apply the production function methodology put forth by the European Commission to estimate the trend of total factor productivity and the natural rate of unemployment, obtained by means of unobserved component models. The estimates of potential output are compared to the analogous estimates for several industrialized economies and to the trends in real GDP extracted by means of alternative time series filters. We find that potential output growth neither features excessive volatility nor procyclicality. By means of a pseudo real-time revision analysis, we show that our production function based output gap aligns well with evidence previously found in the literature.

Suggested Citation

  • Sarah Fischer & Christian Glocker & Serguei Kaniovski & Philipp Wegmüller, 2024. "Assessing the Potential Output for Switzerland: Determinants, Trends and Drivers," Journal of Business Cycle Research, Springer;Centre for International Research on Economic Tendency Surveys (CIRET), vol. 20(2), pages 297-338, July.
    • Handle: RePEc:spr:jbuscr:v:20:y:2024:i:2:d:10.1007_s41549-024-00100-z
    DOI: 10.1007/s41549-024-00100-z
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    More about this item

    Keywords

    Productivity trend; NAWRU; Potential output; Output gap;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E37 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Forecasting and Simulation: Models and Applications

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