BIS Review 116/2007  5  Potential output The second limitation relates to the challenge of judging the level of potential output in real time. To illustrate this point, Figure 2B plots three measures of the output gap.
In the second productivity boom, the introduction of regular audited financial statements, rating agencies, and newsletters covering firm and industry developments further reduced investors’ costs of acquiring information about firms’ finances, which led to a sharp expansion in equity markets and the opening of a new channel of capital flows to that period’s large-sized innovators.