But to explain the realworld outcomes we also have to allow for the role of other influences, specifically structural change. A portion of the swing in the budget balance was of course due to the cyclical upswing. In our analytics, we were able to control this by holding the level of output constant at potential output.
But to apply this to our dynamic economy, we have to allow for uncertainty about the level of potential output at a given time and the growth in potential output over time.