## A Fresh Look at Potential Output in Central, Eastern, and Southeastern European Countries

_IMF Working Papers, February 14, 2017_

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## Bibliographic details
- Authors: Jiri Podpiera, Faezeh Raei, Ara Stepanyan
- Published: February 14, 2017
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781475578980.001

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### Research question and methods
- Research question: Was the postcrisis growth slowdown in Central, Eastern and Southeastern Europe (CESEE) structural or cyclical?
- Methods used:
  - Production function approach
  - Basic multivariate filter
  - Multivariate filter with financial frictions
- Sample and period:
  - 18 CESEE countries
  - 2000-15

### Key findings
- Potential growth weakened significantly after the crisis across most countries in the region.
- The decline in potential growth appears largely due to:
  - Stagnant productivity
  - Weaker capital accumulation
- Common external factors associated with the decline include:
  - Trading partners’ slow potential growth
  - Decline in global trade
  - Stalled expansion of global value chains
- Output gap estimates:
  - Output gaps in 2015 were largely closed in many countries in the region.

### Policy-relevant implications (inferred from findings)
- Policies aimed at restoring potential growth should address:
  - Reviving productivity growth
  - Supporting capital accumulation
  - Mitigating adverse external developments from trading partners and global trade dynamics
  - Reintegrating or leveraging global value chains where feasible

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_Source: https://www.imf.org/en/publications/wp/issues/2017/02/14/a-fresh-look-at-potential-output-in-central-eastern-and-southeastern-european-countries-44665_