output gap

Recessions and Potential Output: Disentangling Measurement Errors, Supply Shocks, and Hysteresis Effects

This paper investigates expert revisions of potential output (PO) estimates following recessions. Using data from the Organisation for Economic Co-operation and Development (OECD), we show that downward revisions are substantial, permanent, and …

How economic crises damage potential output – Evidence from the Great Recession

Economic crises lead to lower potential output (PO) estimates, but little is known about which components of PO are revised. Our paper answers the questions of how much, how fast, and how persistently estimates of the capital stock, of trend labor, …