Year: 2007
Type: article
Abstract: The efficiency of macroeconomic policies depends on adequate business cycle approximation. Given that potential output and the output gap (the difference between actual and potential output) are not directly observable, their values need to be estimated using alternative statistical, structural, and combined techniques. In this paper the Hodrick-Prescott filter and the Cobb-Douglass production function has been applied on the Slovak conditions. The pross and coins of both methods are analysed. The Hodrick-Prescott filter does not capture the structural changes, which were significant especially in the first half of analysed period. Thus the Cobb-Douglass production function seems to be more appropriate. It enables to detect particular factors of potential output growth as technological progress, capital and labour. Despite of potential shortcomings, this approach is still widely used by international institutions, governments and researchers.
Source: Politická ekonomie
DOI: 10.18267/j.polek.609
Authors: Emília Zimková, Jaroslav Barochovský
Institution: Matej Bel University
Language: English
Domain: Social Sciences
Open Access status: hybrid
OpenAlex ID: W2325217826