Let's change "latent GDP" to "average GDP"

"When pulling a dictionary, the meaning of latency is written as" hidden inside and not appearing in the table ".
On the other hand, the average is "to eliminate the difference, a value equal to the target number (amount)".
As general common sense, latency and average are not synonymous.
It seems that there are rarely people who think that their "potential ability" to "demonstrate on average".
However, the definition of latent GDP released by the Cabinet Office and the Bank of Japan is out of this general common sense.
"Potential GDP" is said to be "real average real GDP".
This definition is based on the economic view of the mainstream economics "economy progresses on average on the equilibrium orbit", but it is the root of misunderstanding to people.
Indeed, this definition is used to estimate the output gap and has a profound effect on the formulation of economic policy.
In politicians, economic people, and mass media, it seems that few people are aware of the terminology of the office which means "latency is mean".
I do not think that latent GDP means average GDP and that potential growth rate is average growth rate.
The majority of people think "latent" in a general sense, "latent GDP is a wall (limit) that can not be exceeded by real GDP", or "the potential growth rate is the ceiling of economic growth" It accidentally recognizes it. (Abbreviated) "

Dr. Aoki 's column has detailed explanations about the fatal problem of "latent GDP of average concept" which is one of the "deflation index" of Japan, so please read by all means.

In short, first of all, "latent GDP"
"GDP that can be produced when Japanese labor and facilities are fully operational"
It is originally.

The potential GDP based on the above idea is called "maximum potential conceptual GDP".

However, in the world of economics, unexpectedly the latent GDP has changed to the concept of "average of GDP produced in the past". In fact, the Cabinet Office, regarding latent GDP,
"Realizable GDP when introducing production factors on average on the historical trend of the economy"
And it is defined.

No, wait a moment! For example, as I was an athlete,
"The maximum time you can give is the average time of past races"
And, if it is said, everyone will be "Ha?!" My best time in the past is the race time when it was literally "the best time". My running running beating the highest time should be "latent running power".

However, in the world of economic "academics", the potential GDP has been changed as "past average".

Moreover, latent GDP changes according to "Labor input + capital input + Total factor productivity (TFP)", but also in Dr. Aoki's column, the estimate of the potential GDP of the BOJ is TFP improvement of productivity We are "ignoring".

As a result, the magnitude of potential GDP is a relationship of "latent GDP of maximum concept> average concept of Cabinet Office> average BOJ concept".