This economic brief provides a self-contained guide on the new Plausibility Tool, being a part of the constrained discretion approach to improving the Production Function methodology for calculating potential output and output gaps. It explains the macroeconomic model and its rationale, reports...

This paper provides a detailed description of the current version of the Ecofin Council approved production function (PF) methodology which is used for assessing both the productive capacity (i.e. potential output) and cyclical position (i.e. output gaps) of EU economies. Compared with the...

This paper studies the interaction of financing constraints and labor market imperfections on the labor market and economic activity. My analysis builds on the agency cost framework of Carlstrom and Fuerst [1998. Agency costs and business cycles. Economic Theory, 12(3):583-597]. The aim of this...