Potential output is an elusive concept. This stands in sharp contrast to its prominent role in economic analysis. In particular, monetary targetting as practised by the Deutsche Bundesbank relies on an estimate of future potential output growth. Different approaches usually lead to fairly...

This paper argues that the Phillips curve relationship is not sufficient to trace back the output gap, because the effect of excess demand is not symmetric across tradeable and non-tradeable sectors. In the non-tradeable sector, excess demand creates excess employment and inflation via the...

The macroeconomic production function is a traditional key element of modern macroeconomics, as is the more recent knowledge production function which explains knowledge/patents by certain input factors such as research, foreign direct investment or international technology spillovers. This...