StudentShare solutions
Triangle menu

Potential Output of Bulgaria - Research Paper Example

Not dowloaded yet

Extract of sample
Potential Output of Bulgaria

The study of potential output involves, therefore, the study of GDP, inflation rate and the period during which such economic indicators moved substantially and closely in relation to each other.
Potential GDP basically used to measure economy's productive capacity. Although potential output measures the productive capacity of the economy, it cannot be told as a technical ceiling on output that cannot be exceeded. So it is better to say it is a measure of sustainable output, in which the intensity of resource use is neither adding to nor subtracting from inflationary Pressure. If the actual GDP raises more than potential output (or when GDP Gap is positive) then the constraints on the productive capacity start to bind and the inflation tends to increase. Likewise if the potential output raises more than actual GDP (or when GDP Gap is negative) then the resources remain idle and inflation tends to decrease. The difference between potential output and actual output is known as GDP Gap.
The potential output helps an economy to equate their unemployment rate to Non Accelerating Inflation Rate Natural Rate of Unemployment (NAIRU). Further it helps to make inflation projections, assess the government budget, set interest rate and provides a medium term baseline that allows the policy makers to have a medium term focus.
Bulgaria, is a communist country that entered the EU on 1 January 2007, has accomplished able advance back an above bread-and-butter abatement in 1996. Successive governments accept approved charge to bread-and-butter reforms and amenable budgetary planning, but accept bootless so far to rein in ascent aggrandizement and ample accepted annual deficits (Economy Overview, n. d.). After having enough knowledge about the Potential Output the paper attempts to study about the potential output in Bulgarian economy. The Bulgarian economy was formerly a communist country before it joined the European Union on January 1st 2007 (World Bank, 2003). The economy has become now much stronger after the major economic downturn in 1996. The successive governments of the economy continued to implement measures in order to sustain stable economic growth and overcome unemployment problems. But it failed to resolve the problems of inflation and large current deficits. The measures introduced were mainly targeted to reduce corporate and individual taxes, curtailing corruption and attracting foreign investment. The economy in October 2002 was declared as Functioning Market Economy by the European Commission because of its significant progress.
According to the reports of World Bank, in 2006 Bulgaria succeeded to achieve the highest levels of foreign direct investment, as a share of GDP, among Eastern European countries. But the growing current-account deficit (21.5% of GDP at the end of 2007) and excessive reliance on foreign capital inflow made the economy to depend upon external shocks. Moreover the international financial crisis led to a new flow of investment which could barely cover the current-account deficit in 2007--at 98.2%. The Bulgarian government in 1997 in order to attract additional foreign investment, it lowered corporate tax rates to 10%, which was reported as the lowest rate in Europe (Economy ...Show more

Summary

The analysis of potential output of a country is highly essential not only for framing appropriate monetary policies but for deciding the growth and development of the country as well. Potential Output is the growing target of every economy, as it plays an important role in the formulation of monetary policy that aims at maintaining low and stable inflation…
Author : gmayer
Potential Output of Bulgaria essay example
Read Text Preview
Save Your Time for More Important Things
Let us write or edit the research paper on your topic
"Potential Output of Bulgaria"
with a personal 20% discount.
Grab the best paper

Related Essays

Steam energy: Usage and potential
This paper endeavors to explore a potential alternative of steam turbines and steam in production of energy; the positive aspects of a combine cycle gas combined-cycle power plant; the matter of effectiveness; cost matters and modern combustion technology. Combine Cycle gas Turbine Power Plant are technologically advance and are nowadays used all over the world.
17 pages (4250 words) Research Paper
Market Potential Indicators for Laptop Computers
The eight dimensions are based on the following indicators: urban population and electricity consumption; growth rates of primary energy use and GDP; GNI per capita estimates using PPP (USD) and private consumption as a percentage of GDP; percentage share of middle class in consumption/income; number of telephone lines, mobile phones, PCs, internet users, paved road density, population per retail outlet, and number of households with a television; Economic and Political Freedom Indexes; per capita imports from US and trade as a percentage of GDP; the country risk rating, respectively (globalEDGE, 2011).
2 pages (500 words) Research Paper
Forecast of Demand for Sun Chlorella food supplements and delivery in Bulgaria, Eastern Europe , supplier company point of view
SME Took Kit (2001) puts forth two major forms of demand forecasting. The qualitative demand forecasting has been adopted for this demand forecasting. This is because qualitative demand forecasting has been identified to work best “when situation is vague and little data exist – example with new product and technology” (SME Tool Kit, 2011).
3 pages (750 words) Research Paper
The forecasts on inflation and output growth
When general prices of goods and services in a country rise, the value of money drops. This in return leads to inflation. Inflation then in the long run leads to the decrease of purchasing power of a currency. The occurrence of inflation has led to many central banks around the world to operate on a monetary policy regime of inflation targeting.
4 pages (1000 words) Research Paper
Factors Of The Employees' Poor Output In The Organization
First, lack of motivation among employees contributes massively to their low performance. Motivation is an external factor can enhance the work output of employees. Lack of motivation bars employees from giving their best towards attaining of productivity. Senior managers and supervisors disregard the small grievances, which workers voice.
3 pages (750 words) Research Paper
Impact of currency devaluation output growth in the long run
A huge literature work has been done to study the impact of currency devaluation and depreciation on output growth of economies. There are two major groups of researchers. One group of researchers argues that devaluation of currency increases the
5 pages (1250 words) Research Paper
What affects development in Bulgaria, Hungary, Lithuania and Poland Statistical research project (must be done in State program)
The aim of the research paper was to develop a model to enable in the forecasting of GDP if the other variables are known in addition to determining its (GDP) response to changes in one of more
20 pages (5000 words) Research Paper
Conduct a Search for Potential Research Sources
In this study, the attempt is to evaluate three such researches to and to identify the scope for improvement (if any). The papers that are taken into consideration are Baby Boomers in the Middle: Baby Boomers in the Middle: Analysis of Social Supports Among
5 pages (1250 words) Research Paper
Input and Output Devices
Keyboard is the most popular input device in use. It consists of a named array of switches, and upon pressing one a unique signal is sent to the computer. This signal is then interpreted
3 pages (750 words) Research Paper
Potential of virtual currency
The regulations made by analogy are the tools that get applied by agencies as well as courts in an effort to improve the novel system. The current novel systems do not shape up with the modern regulatory structure.
4 pages (1000 words) Research Paper
Get a custom paper written
by a pro under your requirements!
Win a special DISCOUNT!
Put in your e-mail and click the button with your lucky finger
Your email
YOUR PRIZE:
Apply my DISCOUNT
Comments (0)
Rate this paper:
Thank you! Your comment has been sent and will be posted after moderation