The Measurement of Potential Output for Austria

Monetary and fiscal authorities in many industrial countries use the concept of aggregate potential output as an analytical device to monitor underlying trends or structural developments in key macroeconomic policy variables. Above all, aggregate potential output serves economic policy and research as a guide to the limits to sustainable growth of future output and employment. The deviation of actual output from potential output provides a useful means of directing short-term stabilization policy measures. A new method has recently been proposed as a suitable estimation procedure for evaluating Austria's potential output.