Estimate of potential output and output gap in the czech republic

The article describes the estimate of potencial output and output gap in th e Czech economy on the macroeconomic level for the period 1991-1999 and for ecasted years 2000 and 2001. Two methods are used. The first is the applica tion of Hodrick-Prescott filter to yearly and quarterly data of real GDP. T he second one is Cobb-Douglas production function with technological progre ss, using yearly data about real GDP, stock of capital and labour. In the c ase of production function three variants of "natural" unemployment rate we re used. One of them considers the concept of Non Accelerating Wage Rate of Unemployment (NAWRU). Application of both methods shows relatively low gro wth rate of the potencial GDP. High positive output gap was estimated in 19 96 and negative gap in 1999. After 1999 this negative gap will be gradually closing.