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Potential output

The level of output an economy can sustain at normal capacity use and normal employment without pushing prices up.

How to read the number

It is a modelled quantity, not a measured one. That is why economists can look at the same data and disagree about whether an economy is overheating or still has room.

When the metric lies

The estimate is revised to follow the facts: what was called overheating is later explained away as potential having been higher than thought.

Also known as: sustainable output

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