Research On Relationship Between Output Gap And Industrial Structure In Guangdong Province

Output Gap is an important concept of macroeconomics closely relative to the macro-economy performance, which is statistically described as the difference between the Actual Output and the Potential Output. Potential output is the maximum output an economy can sustain when with the best available technology, the lowest investment cost, achieve the utilization rate of the capital and the labor force which is under the conditions of full employment, and without generating a rise in inflation. Thus, the Output Gap refers to the gap between the Actual output and the Optimum Output in the economy. The Output Gap is an unobserved variable, to estimate it reasonably and analysis it thoroughly is of great significance in evaluating the economic performance, preventing economic fluctuation, providing policy recommendations to government and so on.In this paper, the author mainly studies the relationship between the Output Gap and the Industrial Structure of Guangdong Province. Structurally, the paper is composed by four parts. Firstly, introduce the Output Gap theory and its applications, summarize the methodology and research on Output Gap systematically, and discuss the relationship of the Output Gap and the Industrial Structure in theory. Secondly, estimate the Output Gap of Guangdong Province during year 1978-2008 with production function method, which shows that the Output Gap is negative in most time of the thirty years and experiences evident periodic fluctuations. Then, synthesize the results and the industry structural evolution of Guangdong Province to make an empirical study including comparative analysis, co-integration test and mechanism analysis. The study reveals that there is a significant correlation between Output Gap fluctuation and industry structure adjustment. That is, the adjustments of industry structure were companied by corresponding fluctuation of the Output Gap, there were existed a long-term steady proportionate relationship and an interaction of short-term fluctuation, and the industry structure adjustment was Granger Cause the Output Gap fluctuation. Finally, summarize the study, give some policy recommendations and present some possible themes for further studies.