Crisis Impact: Public Finance Key in Boosting Asia's Economic Growth.
Potential output is the maximum GDP an economy can achieve with its resources. A study on emerging Asian economies from 1997 to 2019 found that factors like research, education, and trade openness positively impact potential output growth. However, financial integration has a negative effect. Debt accumulation, on the other hand, has a positive impact. The study also shows that fiscal rules can affect potential growth, especially after financial crises. Understanding potential output is crucial for governments to make effective fiscal policies for employment and price stability.