Measuring economic slack or shortages: new methods and ways forward

The recent post-covid, geopolitical and energy crisis period has been characterized by conflicting indicators on whether the economy is below, at or above its potential. This is not least due to the multiplicity of large shocks – supply and demand, external and domestic, temporary or lasting, global, idiosyncratic and sectoral – the heightened uncertainty that surrounds them and their transmission to economies. This complex setting is likely to continue, with climate change and the energy transition as well as secular shifts in global value chains looming. The issue is central due to its important role for adequate monetary, fiscal, and structural policies as well as for inflation forecasting. This workshop takes stock of major institutions’ theoretical and empirical approaches to measure potential output, labor market conditions and other indicators developed to gauge price pressures. The impact of sectoral shifts and various forms of market frictions to economic slack and shortages will be featured prominently.

Scientific coordination
Matthieu Darracq-Paries, ECB; Ernest Gnan, SUERF; Juha Kilponen, Bank of Finland; Alessandro Notarpietro, Banca d’ Italia, and Eva Ortega, Banco de España