To estimate potential output, we use a production function approach that combines the inputs of production — labour and capital — along with total factor productivity.16 We have a range of uncertainty with respect to the output gap; around ± 2 percent of potential output.
Given the challenges in estimating potential output in real time,17 we cross-check the results from this approach against a number of other potential output estimates, including estimates from time-series models, and fully-estimated structural models.18 Moreover, the estimate for the output gap is checked against a range of measures, including indicators from 19 4 / 11  BIS central bankers' speeches  the labour market and business surveys.19 Given the important role that the potential output estimate (and thereby the output gap) plays in influencing inflation pressure, these estimates garner considerable discussion and scrutiny as part of the policy process, and are judgementally-adjusted as necessary.