REMARKS ON POTENTIAL GDP ESTIMATION IN ROMANIA

This paper is focused on potential GDP and output gap estimation in Romania using a univariate method – HP filter and a multivariate method – production function method that are applied on annual time series covering years 1990-2008. The production function we use is Cobb-Douglas with potential labor computed with the method proposed by Elmeskov (1993). The results indicate for potential output variations between 0.36% and 2% between 1994-2000 and 5%-6.7% between 2004-2008. For output gap, the results point to stronger gaps at the beginning of 1990s’ that decrease within range of -2.3% and +2.7% between 1999-2000.