In the 16th reading of the LVL 2019 curriculum, it is stated that:
"The outputgap is the difference between the value of GDP estimated as if the economy were on its trend growth path (sometimes referred to as potentialoutput) and the actual value of GDP. A positive output gap opens in times of recession or slow growth"
This would imply: Output gap = Potential Output - Actual GDP.
However, I found numerous legit sources online where output gap is defined as Actual GDP-Potential Output.
Is there a reason why CFAI has reversed the equation?
So true. I found this endlessly frustrating as well. CFAI calls economic underperformance a positive output gap while the financial news media (and pretty much everyone else) calls a positive output gap economic overperformance relative to potential.