Parametric Estimation of Thailand's Potential Output

This study estimates the difference between Potential Output and Actual Output during 1983-2000. The methods used are Non-accelerating Inflation Rate of Unemployment (NAIRU), Stochastic Frontier Production Function, Hodrick and Prescott Multivariate filter and Structural Vector Autoregressive Regression (SVAR). The study concludes that potential output calculated from NAIRU is more suitable for Thailand than other methods. Potential output in year 2000 grows 4.3 percent and output gap is around 7 percent of actual output. The findings do not fully accommodate changes in technology. Structural shift in 1997 makes measurement of TFP very difficult.