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Für eine ökonomischere Fundierung der Trend-TFP in der Ermittlung des Produktionspotenzials
[For a More Economics-Based Foundation of Trend-TFP in the Estimation of Potential Output]

Author

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  • Christian R. Proaño

    (Otto-Friedrich-University Bamberg)

Abstract

In the production function-based approach proposed by the European Commission for the estimation of the potential output, trend total factor productivity (TFP) is indirectly estimated on the basis of cyclical factors. Instead, this article proposes a more economics-based foundation of trend-TFP that is based on the arguments of the endogenous growth theory. A simple econometric exercise shows how the application of this approach may lead to a significantly different assessment of the potential output and, by extension, of the economy’s output gap. This may have far-reaching consequences for the conduct of monetary and fiscal policy, e. g. in the context of the German debt brake.

Suggested Citation

  • Christian R. Proaño, 2022. "Für eine ökonomischere Fundierung der Trend-TFP in der Ermittlung des Produktionspotenzials [For a More Economics-Based Foundation of Trend-TFP in the Estimation of Potential Output]," Wirtschaftsdienst, Springer;ZBW - Leibniz Information Centre for Economics, vol. 102(11), pages 838-841, November.
    • Handle: RePEc:spr:wirtsc:v:102:y:2022:i:11:d:10.1007_s10273-022-3326-x
    DOI: 10.1007/s10273-022-3326-x
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    References listed on IDEAS

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    1. Sebastian Gechert & Tomas Havranek & Zuzana Irsova & Dominika Kolcunova, 2022. "Measuring Capital-Labor Substitution: The Importance of Method Choices and Publication Bias," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 45, pages 55-82, July.
    2. Kydland, Finn E & Prescott, Edward C, 1982. "Time to Build and Aggregate Fluctuations," Econometrica, Econometric Society, vol. 50(6), pages 1345-1370, November.
    3. Born, Benjamin & Pfeifer, Johannes, 2014. "Policy risk and the business cycle," Journal of Monetary Economics, Elsevier, vol. 68(C), pages 68-85.
    4. Sebastian Gechert & Tomas Havranek & Zuzana Irsova & Dominika Kolcunova, 2022. "Measuring Capital-Labor Substitution: The Importance of Method Choices and Publication Bias," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 45, pages 55-82, July.
    5. Florian Schuster & Philippa Sigl-Glöckner, 2022. "Behebung eines Webfehlers: Wie die Konjunkturkomponente demokratisch legitimiert und nachhaltiger werden könnte [Fixing a Design Error: How the Cyclically Adjusted Budget Balance Becomes Democratic," Wirtschaftsdienst, Springer;ZBW - Leibniz Information Centre for Economics, vol. 102(11), pages 826-829, November.
    6. Mr. Shekhar Aiyar & Simon Voigts, 2019. "The Negative Mean Output Gap," IMF Working Papers 2019/183, International Monetary Fund.
    7. Gustav A. Horn & Torsten Niechoj & Christian R. Proaño & Achim Truger & Dieter Vesper & Rudolf Zwiener, 2008. "Die Schuldenbremse - eine Wachstumsbremse?," IMK Report 29-2008, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
    8. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    C10; E60; O40;
    All these keywords.

    JEL classification:

    • C10 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - General
    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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