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...

Potential output estimates during Ireland's pre-2007 housing boom showed narrowing output gaps and positive structural budget balances. These results helped to create a false sense of security among domestic policy makers. It took a deep economic and financial crisis to learn that Ireland had...

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...