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The concepts of potential output and the output gap are central to the IMF’s analytical work in providing policy recommendations to member governments. This key role has stimulated research at the IMF to develop and refine estimation techniques. This paper summarizes the methodology and results of IMF research on potential output, which has focused mainly on the industrial countries but more recently has addressed issues related to developing countries and countries in transition. It then discusses the approaches that country desk officers use for operational purposes, and presents estimates of potential output for the major industrial countries.

Macroeconomics --- Production and Operations Management --- Macroeconomics: Production --- Production --- Cost --- Capital and Total Factor Productivity --- Capacity --- Labor Economics: General --- Labour --- income economics --- Potential output --- Total factor productivity --- Output gap --- Production growth --- Labor --- Economic theory --- Industrial productivity --- Labor economics --- United States

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Structural indicators of a country's fiscal position are regularly used as estimates of both discretionary changes in fiscal policy and the effect of fiscal policy on aggregate demand. This paper looks at such indicators and evaluates, from a theoretical standpoint and from empirical case studies, their usefulness in measuring the size of discretionary policy action or fiscal demand stimulus. Two propositions are examined in detail: first, that the change in the primary structural balance provides a better indicator of discretionary fiscal policy than does the change in the primary balance; and second, that the change in the structural balance is a good indicator of the demand stimulus arising from changes in the fiscal position. In addition, the paper discusses measurement problems relating to structural balances and the use of the fiscal impulse as an alternative to structural balances.

Macroeconomics --- Public Finance --- Production and Operations Management --- Fiscal Policy --- National Government Expenditures and Related Policies: General --- Macroeconomics: Production --- Public finance & taxation --- Fiscal stance --- Fiscal policy --- Macro-fiscal analysis --- Expenditure --- Potential output --- Production --- Expenditures, Public --- Economic theory --- Germany

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The estimated potential output growth decelerated from 4.9 percent in the third quarter of 2000 to 4.2 percent in the first quarter of 2001. In the Israeli context, the sharp and exogenous nature of shocks at the end of 2000 complicated the task of estimation. The paper presents potential output estimates using the Hodrick-Prescott (HP) filter and the unobserved components approach. The potential output and the nonaccelerating inflation rate of unemployment estimates have been obtained simultaneously. The statistical data are also presented in the paper.

Inflation --- Labor --- Macroeconomics --- Production and Operations Management --- Macroeconomics: Production --- Unemployment: Models, Duration, Incidence, and Job Search --- Price Level --- Deflation --- Labour --- income economics --- Potential output --- Output gap --- Production growth --- Cyclical unemployment --- Production --- Prices --- Economic theory --- Unemployment --- Israel

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Growth in emerging markets and developing economies (EMDEs) has generally disappointed since the 2009 global recession, with sizable forecast downgrades in most years. EMDEs continue to face downside risks to growth outlook over the next couple of years. These include heightened global policy uncertainty, trade tensions, spillovers from weaker-than-expected growth in major economies, and disorderly financial market developments. These risks are accompanied by region-specific risks, including geopolitical tensions, armed conflict, and severe weather events. If risks materialize, their impact on EMDEs depends on the magnitude of spillovers and domestic vulnerabilities. Since the 2009 global recession, external, corporate sector and sovereign vulnerabilities have risen in most EMDEs, leaving them less well-prepared for future shocks. Low-income countries, in particular, face elevated vulnerabilities, with about 40 percent of them currently in debt distress. Over the longer run, EMDEs also face weakening potential growth, reflecting decelerations in capital accumulation and productivity growth, as well as demographic headwinds. These constraints are likely to hamper growth in the next decade unless they are mitigated by ambitious and credible reform agendas.

Business Cycles and Stabilization Policies --- Demographic Trends --- Economic Conditions and Volatility --- Economic Forecasting --- Economic Growth --- Emerging Market Economies --- Emerging Markets --- Macroeconomics and Economic Growth --- Potential Growth --- Potential Output --- Private Sector Development --- Productivity Growth --- Risks --- Shocks --- Vulnerability

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Estimates of potential output are an important component of a structured forecasting and policy analysis system. Using information on capacity utilization, this paper extends the multivariate filter developed by Laxton and Tetlow (1992) and modified by Benes and others (2010), Blagrave and others (2015), and Alichi and others (2015). We show that, although still fairly uncertain, the real-time estimates from this approach are more accurate than estimates constructed from naïve univariate statistical filters. The paper presents illustrative estimates for the United States and discusses how the end-of-sample estimates can be improved with additional information.

Macroeconomics. --- Macroeconomic policy making. --- Macroeconomics --- Economics --- Econometric models. --- Mathematical models. --- Inflation --- Production and Operations Management --- Model Construction and Estimation --- Price Level --- Deflation --- Monetary Policy --- Macroeconomics: Production --- Financial Crises --- Economic & financial crises & disasters --- Potential output --- Output gap --- Capacity utilization --- Global financial crisis of 2008-2009 --- Production --- Prices --- Financial crises --- Economic theory --- Industrial capacity --- Global Financial Crisis, 2008-2009 --- United States