Estimating labour and output gap: evidence from the Athens Olympic Region in Greece

Abstract

The present article estimates potential labour and labour gap as well as potential output and output gap using a Cobb–Douglas production function and a Hodrick–Prescott filter. We investigate the Athens Region in Greece by sector of economic activity, with the aid of the non-accelerating wage inflation rate of unemployment concept. The results support the idea that the Athens region seems to be working, mostly, over the regional economy's capabilities, a fact which leads to inflationary pressure.