The pace of potential output growth in the South African economy
N Ehlers, L Mboji and M M Smal
Last Modified Date:
2021-12-08, 10:15 AM
Publications > Working Papers
In a flexible inflation-targeting framework the output and inflation gaps are key measures of inflationary pressures and play an important role in determining the optimal policy interest rate. The estimation of potential output is, however, a challenge since it cannot be directly observed. This note explains the methodologies currently used by the South African Reserve Bank to estimate potential output growth and discusses changes to the estimate since the onset of the global financial and economic crisis.