우리나라 잠재성장률 추정과 전망

Estimation and Forecasts of Potential GDP in Korea

Interest in actually measuring potential GDP grew as Keynesian macroeconomic views of fine tuning aggregate demand to close gaps between potential and actual outputs gained currency until the 1980s. Even though macroeconomic thought has changed considerably regarding the efficacy of aggregate demand management policies since that time, those gaps are still understood to have a first order positive influence over movements in inflation. A better understanding of potential GDP has more practical relevance in Korea in the post-1997 crisis period, as economists and policy-makers are still unsure of the extent of permanence of the adverse influence of the crisis and its ftermath. Despite the quick rebound in 1999 and 2000, the experience of the 1997 financial crisis created a distinctively pessimistic assessment of growth potential of the economy by policymakers and economists. Such a view is problematic that there is little coherence between a positive assessment (it might be difficult to grow at the pace seen in the pre-1997 crisis period, 7.2% per year for 1990-1997), and normative implications; targeting more than 5% growth per year, for example, will have ruinous consequences for the economy. Perhaps that might be the case. But a more systematic examination appears to be in order before making such a judgment with potentially serious repercussions. We found that even though the pessimistic view is not fully warranted, the trend growth of the potential GDP indeed has fallen to about 5%, albeit volatile, since the 1997 financial crisis. We then examine what needs to be done to boost the potential GDP, and offer a simulation using the estimated models to assess the importance of boosting investment to boost Koreas potential GDP.