Estimating Potential GDP and Output Gap

 I have been very interested  in output gap estimating and researching the issue, because there are economic theory conflicts which muddy what governmental fiscal policy should be.  While I have not had the time to pull my research together in an article, I continue to follow the subject and add to my research.

The CBPP has a new paper out entitled "Real-Time Estimates of Potential GDP: Should the Fed
Really Be Hitting the Brakes?"which effectively finds that "... the U.S. economy is significantly underperforming relative to its potential, effectively leaving over a trillion dollars on the table with each passing year."

While this paper is in my Daily Research Links for this week available to subscribers, the full paper is important enough that you should read it at the CBPP.

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