<abstract xmlns="http://www.w3.org/1999/xhtml"><p> Spurred by the recent global economic crisis, there has been a resurgence of research on output gaps. As the crisis caused a decline in potential GDP due to a strong contraction in demand, it is expected that the recovery of potential output will be especially difficult in demand-driven small open economies, such as the Western Balkan countries, where recovery will strongly depend on global international trade recovery. The purpose of this research is to calculate and compare pre and post-crisis potential GDPs and GDP gaps for the Western Balkan countries. The symmetric filter method developed by Hodrick and Prescott is used to de-trend GDP time series data by decomposing it into growth and cyclical components. The results point to a strong decrease in potential output growth compared to the pre-crisis potential output growth of the Western Balkans.</p></abstract>

Spurred by the recent global economic crisis, there has been a resurgence of research on output gaps. As the crisis caused a decline in potential GDP due to a strong contraction in demand, it is expected that the recovery of potential output will be especially difficult in demand-driven small open economies, such as the Western Balkan countries, where recovery will strongly depend on global international trade recovery. The purpose of this research is to calculate and compare pre and post-crisis potential GDPs and GDP gaps for the Western Balkan countries. The symmetric filter method developed by Hodrick and Prescott is used to de-trend GDP time series data by decomposing it into growth and cyclical components. The results point to a strong decrease in potential output growth compared to the pre-crisis potential output growth of the Western Balkans.

Post-Crisis Potential Output in the Western Balkans

Budget Expert World Bank Public Expenditure Management Peer Assisted Learning Network

Senior Economist International Monetary Fund Resident Representative Office to BiH

Economic Adviser, European Union Delegation to BiH

South East European Journal of Economics and Business

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.

{"article-title":"Post-Crisis Potential Output in the Western Balkans"}

Spurred by the recent global economic crisis, there has been a resurgence of research on output gaps. As the crisis caused a decline in potential GDP due to a...

Post-Crisis Potential Output in the Western Balkans

Published Online: Aug 15, 2014

Page range: 23 - 33

DOI: https://doi.org/10.2478/jeb-2013-0002

Keywords
Potential output, Output gap, Crisis, Western Balkans, HP filter

© South East European Journal of Economics and Business

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.

Post-Crisis Potential Output in the Western Balkans

Published Online: Aug 15, 2014

Page range: 23 - 33

DOI: https://doi.org/10.2478/jeb-2013-0002

KeywordsPotential output, Output gap, Crisis, Western Balkans, HP filter

© South East European Journal of Economics and Business

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.

Keywords
Potential output, Output gap, Crisis, Western Balkans, HP filter