I realise that this is probably a very simplistic question, but I have
got myself confused, and would appreciate some help.
I have found conflicting definitions of when an output gap is positive,
and when it is negative. Anderton (3rd Edition) page 167 says that the
output gap is positive when GDP is above the productive potential. Biz-
Ed glossary says that a positive output gap means we are producing less
than we potentially could. Most definitions just talk about "the
difference" between GDP and the productive potential, which avoids the
issue. Is there an accepted convention?
Thanks in anticipation
Alison
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Alison Eves
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