Estimating the potential output of the New Zealand economy

Release date
Vol. 61. No. 3. September 1998
Paul Conway; Benjamin Hunt
Potential output plays a central role in the formulation of monetary policy focused on maintaining low and stable inflation. In this article, the technique that the Reserve Bank currently uses to estimate potential output is outlined. A model that explains how the productivity component of potential output changes through time, and the implications that this has for future potential output growth, is also presented.