Abstract
One of the most used methods of estimation of potential output and output gap, used by many national and international organisations, is a production function. The aim of this paper is to study the impact of method of computation capital-to-output ratio on results of estimation of output gap and potential output, which are very important, but not measurable. We used two methods of computation. The first one was simple: we set it up constant. The second one was calculated according to a sophisticated model. The results of this paper have shown that using variable capital-to-output ratio will bring not very different results from using a constant one. These results were confirmed both for Czech economy and Slovak economy.
Sign-in/Register to access full text options 
Free) 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a call
