Estimating Poland's Potential Output: A Production Function Approach

By Natan P. Epstein, Corrado Macchiarelli

January 1, 2010

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Natan P. Epstein, and Corrado Macchiarelli. Estimating Poland's Potential Output: A Production Function Approach, (USA: International Monetary Fund, 2010) accessed November 23, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

The paper develops a methodology based on the production-function approach to estimate potential output of the Polish economy. The paper concentrates on obtaining a robust estimate of the labor input by deriving Poland's natural rate of unemployment. The estimated unemployment gap is found to track well pressures on resource constraints. Moreover, the overall results show that, prior to the recent global financial crisis, Poland's output and employment were both growing above potential. The production function is also used to derive medium-term projections of the output gap. According to our methodology, in the aftermath of the global crisis, Poland is not expected to experience a sizable and persistent negative output gap.

Subject: Employment, Labor, Output gap, Potential output, Production, Unemployment rate

Keywords: Cobb-Douglas production function methodology, Employment, Global, Long-run unemployment rate estimate, NAIRU, Output gap, Phillips Curve estimation, Potential growth, Potential output, Production function, Production function framework, Production-function methodology, Production-function output-gap series, Unemployment gap, Unemployment rate, WP

Publication Details

Pages:

21
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2010/015
Stock No:

WPIEA2010015
ISBN:

9781451962093
ISSN:

1018-5941

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