Marco Buti, Nicolas Carnot, Atanas Hristov, Kieran Mc Morrow , Werner Roeger and Valerie Vandermeulen, (2019), “Potential output and EU fiscal surveillance”, VoxEU, 23 September
Criticisms have recently been raised on the usefulness of the EU’s commonly agreed methodology for estimating potential output and output gaps. Whilst mindful of the uncertainty which inevitably surrounds an unobservable variable such as potential output, this column argues that much of the criticism is both conceptually and empirically inaccurate, as well as being neglectful of the plausibility of the EU’s potential output estimates compared to other business cycle indicators. In addition, many of the criticisms focus to an excessive degree on the role of potential output in EU fiscal surveillance, with the practice of surveillance being much more flexible and less rigid than many commentators tend to suggest.
Relevant Posts
- Barry Eichengreen, (2019), «The Return of Fiscal Policy», Project Syndicate, 13 May
- Marco Buti, Nicolas Carnot, (2018), «The case for a central fiscal capacity in EMU», VoxEU.org, 7 December