This paper assesses the performance of the EU's production function (PF) methodology for estimating output gaps since its introduction in the EU's policy surveillance procedures in 2002. It looks at how the methodology has performed relative to the method used up until 2002 (i.e. the Hodrick...

This paper sheds light on two specific, but interlinked, questions - firstly, how do the EU's, medium term actual GDP growth rate forecasts compare, in terms of accuracy and biasedness, with those of the EU's Member States, in their annual Stability and Convergence Programme (SCP) updates; and...