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GDP growth and resource utilisation Saltsjöbaden 6 October 2011 First Deputy Governor Svante Öberg. Summary. Resource utilisation can be measured in several different ways, among others as actual GDP in relation to potential GDP (GDP gap) - PowerPoint PPT PresentationTRANSCRIPT
GDP growth and resource utilisationSaltsjöbaden
6 October 2011
First Deputy Governor Svante Öberg
Summary Resource utilisation can be
measured in several different ways, among others as actual GDP in relation to potential GDP (GDP gap)
The financial crisis has lowered the growth rate of potential GDP
Resource utilisation is thus largely normal, even though GDP is only slightly higher than before the crisis
Outline1. GDP growth over the longer term2. The significance of resource utilisation
for monetary policy3. The Riksbank’s calculations of
potential GDP4. The impact of the financial crisis on
potential GDP5. Different measures of resource
utilisation and what they say about resource utilisation at present
6. The need for continued analyses
1. GDP growth over the longer term
1. Actual and trend GDP Logarithmed levels
Sources: Statistics Sweden and the Riksbank
Note. HP trend derived solely from annual data 1950-2010.
4.5
5.0
5.5
6.0
6.5
4.5
5.0
5.5
6.0
6.5
50 55 60 65 70 75 80 85 90 95 00 05 10
GDP
Trend
2. Actual and trend growthAnnual percentage change
Sources: Statistics Sweden and the Riksbank
Note. HP trend derived solely from annual data 1950-2010.
-6
-4
-2
0
2
4
6
8
-6
-4
-2
0
2
4
6
8
50 55 60 65 70 75 80 85 90 95 00 05 10
GDP growth
Trend Growth
2. The significance of resource utilisation for
monetary policy
The target for monetary policy is to hold CPI inflation at 2 per cent
The Riksbank also takes into account high GDP, high employment and low unemployment
Resource utilisation is also an indicator of future inflation
3. Resource utilisation and inflationCorrelation betwen different measures of resource utilisation and CPIF inflation, 0-12 quarters ahead
Note. Estimation period is 1997-2006. Sources: Statistics Sweden and the Riksbank
-0.6
-0.4
-0.2
0.0
0.2
0.4
0.6
0.8
1.0
-0.6
-0.4
-0.2
0.0
0.2
0.4
0.6
0.8
1.0
0 1 2 3 4 5 6 7 8 9 10 11 12
GDP gap (PF)
Hours gap (PF)
RU indicator
3. The Riksbank’s calculations of potential
GDP
The production function approach
4. Total factor productivityLogarithmed levels
Source: The Riksbank
-3.9
-3.8
-3.7
-3.6
-3.5
-3.4
-3.3
-3.9
-3.8
-3.7
-3.6
-3.5
-3.4
-3.3
80 85 90 95 00 05 10 15 20
Actual TFP
TFP, forecast
Potential TFP
5. Capital stockLogarithmed level
Note. Capital services Sources: The OECD and the Riksbank
27.8
28.0
28.2
28.4
28.6
28.8
29.0
29.2
27.8
28.0
28.2
28.4
28.6
28.8
29.0
29.2
80 85 90 95 00 05 10 15 20
6. Number of hours workedLogarithmed levels
Sources: Statistics Sweden and the Riksbank
11.9
12.0
12.0
12.1
12.1
12.2
12.2
11.9
12.0
12.0
12.1
12.1
12.2
12.2
80 85 90 95 00 05 10 15 20
HoursHours, forecastHours, potentialHours, HP trend
7. Actual and potential GDPLogarithmed levels
Sources: Statistics Sweden and the Riksbank
12.8
13.0
13.2
13.4
13.6
13.8
14.0
12.8
13.0
13.2
13.4
13.6
13.8
14.0
80 85 90 95 00 05 10 15 20
GDP
GDP, forecast
GDP, potential (PF)
GDP, HP trend
8. GDP gapPer cent
Note. GDP gap (HP) refers to GDP’s deviation from trend calculated with a HP-filter. GDP gap (PF) refers to GDP’s deviation from trend calculated with a production
function. Sources: Statistics Sweden and the Riksbank
-8
-6
-4
-2
0
2
4
6
-8
-6
-4
-2
0
2
4
6
80 85 90 95 00 05 10
GDP gap (HP)
GDP gap (PF)
9. Hours gapPer cent
Note. Hours gap (HP) refers to the deviation of hours worked from trend calculated with a Hodrick Prescott filter. Hours gap refers to the deviation of hours worked from the Riksbank’s assessed
trend for hours worked.
Sources: Statistics Sweden and the Riksbank
-6
-4
-2
0
2
4
6
-6
-4
-2
0
2
4
6
80 85 90 95 00 05 10
Hours gap (HP)
Hours gap
10. GDP gap, September and in real timePer cent
Sources: Statistics Sweden and the Riksbank
-8
-6
-4
-2
0
2
4
6
-8
-6
-4
-2
0
2
4
6
05 06 07 08 09 10 11 12 13
September 2011
Real time
Note. September 2011 refers to the PF gap. Real time refers to the HP gap except from October 2010 and onwards when the PF gap is used.
.
4. The impact of the financial crisis on
potential GDP
8. GDP gapPer cent
Note. GDP gap (HP) refers to GDP’s deviation from trend calculated with a HP-filter. GDP gap (PF) refers to GDP’s deviation from trend calculated with a production function. Sources: Statistics Sweden and the Riksbank
-8
-6
-4
-2
0
2
4
6
-8
-6
-4
-2
0
2
4
6
80 85 90 95 00 05 10
GDP gap (HP)
GDP gap (PF)
GDP growth 1995–2005: 3.1% per year
GDP growth 2005–2011: 2.0% per year
GDP 2011 about 6 per cent lower than suggested by a projection of 3 per cent per year from 2005
5. Different measures of resource utilisation and what
they say about resource utilisation at present
8. GDP gapPer cent
Note. GDP gap (HP) refers to GDP’s deviation from trend calculated with a HP-filter. GDP gap (PF) refers to GDP’s deviation from trend calculated with a production function. Sources: Statistics Sweden and the Riksbank
-8
-6
-4
-2
0
2
4
6
-8
-6
-4
-2
0
2
4
6
80 85 90 95 00 05 10
GDP gap (HP)
GDP gap (PF)
9. Hours gapPer cent
Note. Hours gap (HP) refers to the deviation of hours worked from trend calculated with a Hodrick Prescott filter. Hours gap refers to the deviation of hours worked from the Riksbank’s assessed
trend for hours worked.
Sources: Statistics Sweden and the Riksbank
-6
-4
-2
0
2
4
6
-6
-4
-2
0
2
4
6
80 85 90 95 00 05 10
Hours gap (HP)
Hours gap
11. Capacity utilisationPer cent, seasonally-adjusted data
Source: Statistics Sweden
70
75
80
85
90
95
100
70
75
80
85
90
95
100
95 97 99 01 03 05 07 09 11
Capacity utilisation in the manufacturing sector
Mean, 1996-2008
12. Employment ratePercentage of population aged 16-64
Source: Statistics Sweden
60
65
70
75
80
85
60
65
70
75
80
85
80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12
Employment rate
Mean, 2000-2008
13. RU indicator and GDP gapStandard deviation and percentage
Note. The RU indicator has been normalised so that the mean value is 0 and the standard deviation is 1. The reference period is 1996-2008. GDP gap according to production function (PF) approach.
-8
-6
-4
-2
0
2
4
6
-8
-6
-4
-2
0
2
4
6
95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14
GDP gap (PF)
RU indicator
Sources: Statistics Sweden and the Riksbank
14. Actual and long-term unemploymentPer cent of labour force aged 16-64
Note. Forecast refers to ages 15-74 Sources: Statistics Sweden and the Riksbank
0
2
4
6
8
10
12
0
2
4
6
8
10
12
80 85 90 95 00 05 10 15 20
Unemployment
Unemployment, forecast
Mean, 2000-2008
Long-term unemployment
15. Unemployment gapPer cent
Note. Unemployment gap refers to the deviation between actual and long-term unemployment in Figure 14.
Sources: Statistics Sweden and the Riksbank
-4
-3
-2
-1
0
1
2
3
4
5
-4
-3
-2
-1
0
1
2
3
4
5
80 85 90 95 00 05 10
16. Labour shortagesPercentage of companies, seasonally-adjusted data
Source: National Institute of Economic Research
0
5
10
15
20
25
30
35
40
45
50
0
5
10
15
20
25
30
35
40
45
50
96 98 00 02 04 06 08 10
Labour shortagesMean, 1996-2008
17. Beveridge curvePer cent
Sources: Statistics Sweden and the RiksbankNote. Years indicate the first quarter of each year.
0.0
0.1
0.2
0.3
0.4
0.5
0.6
5.0 5.5 6.0 6.5 7.0 7.5 8.0 8.5 9.0 9.5
Vaca
ncy
rate
Unemployment
20022001
20032004 2005
2006
2007
2008
2009
2011
2010
Table 1. Resource utilisation, second quarter 2011Gap as percentage and RU indicator in standard deviation
GDP gap, HP 0.4GDP gap, PF -0.4
Hours gap, HP 0.3Hours gap, PF -0.8
Capacity utilisation¹ -0.3Employment rate² 0.3
RU indicator 0.2Unemployment gap³ -1.0
Labour shortage¹ 2.3¹Deviation from mean value, percentage points, 1996-2008²Deviation from mean value, percentage points, 2000-2008 ³Percentage points, reverse sign
6. Need for continued analyses
What determines the development of productivity and potential GDP in normal business cycles and in deep recessions?
Particularly TFP Combine the production function
approach and economic short-term statistics
Use micro data
Thank you!