Estimating a quarterly potential output series for Switzerland

The output gap as a relative deviation of real GDP from potential output indicates the cyclical position of an economy. Knowing the current cyclical position is helpful for economic forecasting and in formulating economic policy. Being a key indicator of inflationary pressures, the output gap is highly relevant for monetary policy. Estimates of the output gap are equally relevant for fiscal policy that aims to cushion the effect of aggregate fluctuations on incomes while also achieving a structural balance over the business cycle. The aim of this project is to estimate potential output for Switzerland using the methodology of the European Commission on a quarterly basis.