Abstract
ActualityThe concept of output gap plays an important role in traditional macroeconomic theory, applied research and monetary policy. GoalThe paper reveals analyses of the potential economic development in Ukraine and in some countries of the world under limited information. Thus, the practical goal is to consider the best modelling approach for the possibility to regulate GDP in Ukraine, as it has been experienced in other countries of the world. MethodThe research is realized with the help of economic-mathematical modelling of GDP gap based on the analysis of the production function, statistical methods of distinguishing the trend component, one-dimensional filtration, multidimensional filtration. ResultsPractical importance of the paper includes implementation of methods for estimating potential GDP and the GDP gap, in particular, the authors proposed to use an approach based on the production function for the potential growth of European countries modelling. The model reveals that for the Eurozone countries, in the short term, it is not expected that the economy will reach its potential level. The negative forecast is explained by the fact that the Eurozone has been severely affected by the debt crisis. There has been a significant increase in the gap in production volumes, which in turn led to deflation. Despite the uncertainty in the assessment of potential GDP and GDP gap for Ukraine the multidimensional method provided the best modelling result. Thus, it is disclosed that Ukraine is under the growing wave of the business cycle, but not in the synergy with the EU dynamics.
Highlights
The question of economic growth and effective social production is one of the most researched problems
Practical importance of the paper includes implementation of methods for estimating potential GDP and the GDP gap, in particular, the authors proposed to use an approach based on the production function for the potential growth of European countries modelling
The particular attention is paid to the category of “potential economic growth” that is a key in various areas of economic policy and plays a significant role in studies aimed at the understanding the mechanisms of the functioning of the economy
Summary
The question of economic growth and effective social production is one of the most researched problems. The particular attention is paid to the category of “potential economic growth” that is a key in various areas of economic policy and plays a significant role in studies aimed at the understanding the mechanisms of the functioning of the economy. Modern economic theory distinguishes between the actual GDP and potential GDP that is most effective for the functioning of the economy. Very often the actual output does not reach its potential value, or, exceeds it. Such an effect is called the “production gap” or “GDP gap”. The gap in production is an important indicator of the economic state and is widely used to determine monetary policy in developed economies
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