The Definition and Measurement Method of Potential Output and Output Gap

Potential output and output gap is the important concepts of the macroeconomics, is the importance base on which economic policy draw up. potential output has two definition of the Keynesian traditional and the neoclassic macroeconomic school, The measurement method of potential output can divided into three major type of statistical trend partition method, economic structure relation estimate method and the combination method. There are already a lot of research and measurement practice about potential output and output gap both at home and abroad, mostly adopt more than one measurement methods at the same time, among them the production function method is a widespread accepted one, The incorrect measurement of potential output and output gap will usually causes policy drawing up incorrectly, their measurement method still need further perfected.