Unit labor costs have risen, and potential output growth has fallen.

The same has started to happen with the notion of potential output growth.

Convergence programmes normally cover the following three to four years but are regularly updated during that time .

the statutes of national central banks , with both the Treaty and the Statute of the European System of Central Banks and of the European Central Bank . Reports produced under Article 121 ( 1 ) by the European Commission and the EMI in 1998 examined whether each Member State had achieved a high degree of sustainable convergence on the basis of the fulfilment of these criteria .

Thus, Latvia today enjoys a sustainable fiscal position, with output close to its potential and growing.

The theory behind the massive economic stimulus efforts that many governments have undertaken rests on the notion of the output gap. This is the difference between an economy s actual output and its potential output.

Convergence programme a programme containing medium term government plans and assumptions regarding the development of key economic variables towards the achievement of reference values indicated in the Treaty . Measures to consolidate fiscal balances are also highlighted , together with underlying economic scenarios .

Furthermore , the derivation of the reference value has been based on medium term assumptions regarding potential output growth and the trend in the velocity of circulation of M3 .

In a demand driven recession, actual output falls below potential, which results in a rise in unemployment.

Despite a once unthinkable amount of monetary stimulus, global output remains well below potential, with the potential itself at risk of being suppressed.

Furthermore , reforms of expenditure and taxation , and a reprioritisation towards productive expenditure , would foster potential output growth .

Similarly, a credit fueled construction boom drives output above potential, resulting in inflation.

Policymakers struggle to get their assessment right. Some wonder what is left of the notion of potential output.

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They are examined by the European Commission and the Economic and Financial Committee , whose reports serve as the basis for an assessment by the ECOFIN Council .

Following the start of Stage Three of Economic and Monetary Union , EU Member States with a derogation continue to submit convergence programmes , while countries which are members of the euro area present annual stability programmes , in accordance with the Stability and Growth Pact .

Estimates of short term or current potential output are also constantly reworked, implying continuous change in the assessment of the underlying fiscal situation.

By contrast, output in Greece, which was slow to adopt austerity, is still 12 below its estimated potential and continues to fall.

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The 2011 treaty actually built on a series of previous reforms that put increasing emphasis on potential output based assessments of the fiscal situation.

Though the US is finally emerging from an extended period in which potential output exceeded demand, high unemployment continues to suppress demand in Europe.

A better way to judge post crisis performance is to look at the output gap 160 that is, actual GDP relative to potential GDP.

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As with all businesses, the best way to do this is establish a business plan, where PRISM is the product and where the mission statement, vision, product definition and most importantly the potential market have to be clearly identified.

You have so much potential.

This notwithstanding , the uncertainties surrounding estimates of medium term development of potential output growth in the euro area have become skewed to the upside .

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And that potential, that powerful potential, is also our potential, of you and me.

This could be addressed promptly while eliminating inefficiencies and re orienting institutions that were co opted by the old system to serve the few rather than the many would increase potential output significantly.

This in turn would allow the EU to realise its substantial potential for stronger output and employment growth and to increase its resilience to shocks .

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But there's so much potential.

The Governing Council also wishes to emphasise that potential output growth could be strengthened by further structural reforms in the labour and goods markets .