Estimating potential output in developing countries

Burns, Andrew; Rensburg, Theo Janse van; Dybczak, Kamil; Bui, Trung Thanh

doi:10.1016/j.jpolmod.2014.04.004

Cited by 10 publications

(9 citation statements)

References 3 publications

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“…where GDP is gross domestic product, K is the capital stock, L is labor employed, TFP represents total factor productivity (TFP), α is the income share of capital (assumed to be 0.3), and the subscript t denotes time. 2 This paper's measure of labor differs from that of Burns et al (2014) by using labor market data (labor force participation, sectoral employment, and unemployment) produced by the International Labour Organization to measure labor inputs. 3 Burns et al (2014) and other earlier work used the working-age population as an alternative proxy.…”

Section: Methodsmentioning

confidence: 99%

“…2 This paper's measure of labor differs from that of Burns et al (2014) by using labor market data (labor force participation, sectoral employment, and unemployment) produced by the International Labour Organization to measure labor inputs. 3 Burns et al (2014) and other earlier work used the working-age population as an alternative proxy. It is recognized that the labor market data capture labor market behavior imperfectly, especially in economies characterized by a sizable informal labor sector.…”

Section: Methodsmentioning

confidence: 99%

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Potential Output in Asia: Some Forward-Looking Scenarios

Burns

2016

Asian Development Review

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This paper presents estimates of potential output growth for a sample of 26 Asian economies and projects potential output growth through 2040 under several scenarios. Results suggest that in the absence of further capital deepening, and assuming continued total factor productivity growth at recent rates, potential output growth across economies could slow from a median of 4.6% during 2010–2015 to 2.7% between 2035 and 2040. Demographic trends and an assumed stabilization in capital–output ratios account for most of the slowing. Much better outcomes are possible if trends are supported by policy. Better total factor productivity growth could raise potential output by between 11% and 24% by 2040, while lower unemployment and higher participation rates could boost potential output by 10% or more in some South Asian economies. An improved investment climate could add between 6% and 10% to potential output in most economies, while accelerating structural convergence (moving labor from lower to higher productivity sectors) could raise potential output by 10% or more in half of the examined countries.

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Section: Methodsmentioning

confidence: 99%

Section: Methodsmentioning

confidence: 99%

Potential Output in Asia: Some Forward-Looking Scenarios

Burns

2016

Asian Development Review

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“…* is the natural rate of unemployment (usually determined using the equilibrium solution to labor demand and labor supply); LFPR is the labor force participation rate; LF 1564 is the working-age population; and K is the capital stock (calculated using the perpetual inventory method). The share of labor, α, is set to 0.7, a standard assumption (see Burns et al 2014). We use this simplifying assumption because of the difficulty of obtaining the share of labor income in Iraq's nonoil GDP.…”

Section: Annex 2b: Potential Gdp Calculationmentioning

confidence: 99%

Breaking Out of Fragility: A Country Economic Memorandum for Diversification and Growth in Iraq

2020

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Books in this series are published to communicate the results of Bank research, analysis, and operational experience with the least possible delay. The extent of language editing varies from book to book. This work is a product of the staff of The World Bank with external contributions. The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views of The World Bank, its Board of Executive Directors, or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of The World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries. Nothing herein shall constitute or be considered to be a limitation upon or waiver of the privileges and immunities of The World Bank, all of which are specifically reserved.

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“…A large literature, using varying samples, also finds that both cyclical and structural factors have contributed to the post-crisis EM growth slowdown. 14 11 GDP is assumed to be characterized by a Cobb-Douglas production function of total factor productivity, labor proxied by employment, and the capital stock derived using the perpetual inventory method, assuming a labor share of national income of 0.7 (Burns et al 2014). Total factor productivity is derived as the residual.…”

Section: Slowing Productivity Growthmentioning

confidence: 99%

“…Potential labor input growth is thus calculated as the growth rate in working age population. The stock of capital is constructed using a simplified version of the perpetual inventory methodology from investment data, assuming a depreciation rate of 7 percent (IMF 2005;Burns et al 2014). Implicitly, this assumes that there are no shifts over time in the productivity of investment, e.g.…”

Section: Slowing Productivity Growthmentioning

confidence: 99%

Slowdown in Emerging Markets: Rough Patch or Prolonged Weakness?

Didier¹,

Köse

Ohnsorge

et al. 2016

SSRN Journal

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Abstract: Emerging markets (EM) face their fifth consecutive year of slowing growth and a possibly longer period of sluggish performance than previously thought. This paper presents a comprehensive analysis of the nature of and the appropriate policy responses to the growth slowdown in EM. It reports three main results. First, the slowdown is synchronous and protracted, affecting a sizable number of EM, especially large ones. Second, it has been driven by both external factors, including weak world trade, low commodity prices, and tightening financial conditions; and domestic factors, including slowdown in productivity growth, bouts of policy uncertainty, and an erosion of policy buffers. Both structural and cyclical factors have contributed to the slowdown. Third, the room for accommodative cyclical fiscal and monetary policies is limited in many EM, lending urgency to putting in place structural reforms to upgrade governance structures, improve business environments, raise human and physical capital, and manage demographic pressures. JEL Classification Numbers: E60, F6, F43, O4, O43. Terms of use: Documents in

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Estimating potential output in developing countries

Cited by 10 publications

References 3 publications

Potential Output in Asia: Some Forward-Looking Scenarios

Potential Output in Asia: Some Forward-Looking Scenarios

Breaking Out of Fragility: A Country Economic Memorandum for Diversification and Growth in Iraq

Slowdown in Emerging Markets: Rough Patch or Prolonged Weakness?

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