Should-Read: Olivier Coibion, Yuriy Gorodnichenko, and Mauricio Ulate: The US economy is not yet back to its potential

Should-Read: Olivier Coibion, Yuriy Gorodnichenko, and Mauricio Ulate: The US economy is not yet back to its potential: “Estimates of potential output around the world have been systematically revised downward since the Great Recession… http://voxeu.org/article/us-economy-not-yet-back-its-potential

…The methods used to create these estimates do not distinguish between transitory and permanent shocks, or demand and supply shocks. Taking these differences into account suggests US output is almost 10 percentage points below potential output. This has important immediate implications for policymakers, and raises questions for those who estimate potential output…