Sources: Statistics Sweden and the Riksbank  10. GDP gap, September and in real time Per cent 6  6  4  4  September 2011 Real time  2  2  0  0  -2  -2  -4  -4  -6  -6  -8  -8 05  06  07  08  09  10  11  12  13  Note. September 2011 refers to the PF gap. Real time refers to the HP gap except from October 2010 and onwards when the PF gap is used. Sources: Statistics Sweden and the Riksbank  BIS central bankers’ speeches  13  11. Capacity utilisation Per cent, seasonally-adjusted data 100  100 Capacity utilisation in the manufacturing sector  95  95  Mean, 1996-2008  90  90  85  85  80  80  75  75  70  70 95  97  99  01  03  05  07  09  11  Source: Statistics Sweden  12.
2  BIS central bankers’ speeches  The Riksbank’s calculations of potential GDP Resource utilisation can be measured in several different ways. Here, I will demonstrate how we, at the Riksbank, calculate measurements of resource utilisation based on GDP and potential GDP, as well as hours worked and potential hours worked. Potential GDP refers to the level of GDP that is consistent with a use of the available resources that is sustainable in the long term and that does not push up inflation. If GDP exceeds the potential level, then resource utilisation is high – and vice versa. We call the difference between actual and potential GDP the GDP gap.6 When resource utilisation is normal, GDP is equal to potential BNP, and the GDP gap is equal to zero. Consequently, potential GDP does not refer to the highest level GDP may reach over the short term. In Figure 1, the trend development of GDP is represented by a Hodrick-Prescott trend (HP trend). An HP trend is something between a linear trend and the actual development of GDP. The HP trend is a common and often fairly good measure of the underlying long-term development in GDP during normal cyclical fluctuations. But the HP trend is not good at estimating the underlying development of GDP at the end of a time series and it gives no guidance as to why output deviates from its trend level.