This paper reviews the use of potential growth and output gap estimates for the assessment of the structural performance of the french economy and the orientation of macroeconomic policies. Based on a production function approach, these estimates suggest that the potential growth of the french economy – i.e. the output growth rate consistent with a stable inflation rate – has raised during the second half of the nineties from 2 to 2,5% yoy. Since 1997 the french economy has grown above potential, closing the output gap apparently in 2000. The raise of structural employment and the vigorous capital accumulation contributed to this transitory acceleration of potential output. In the medium run, this potential growth rate may be maintained and could raise to 3% yoy if investment remains strong and labour market reforms lead to the expected decline of structural unemployment and rise of the participation rate.
Classification JEL: E20, E32, O47