Understand that the “Growth Accounting Relations” and “Labor Productivity Growth Accounting” are used to estimate the GROWTH of the Potential GDP, however, I don’t quite understand how the Potential GDP itself is being estimated at the beginning.
If growth rate was estimated to be 4.1%, it is understood that it takes the form of A(1+g) = B.
This way we know what the next period of Potential GDP (B) is at.
However, how did we determine the current Potential GDP (A) at the first place ?
I don’t see any materials inside CFAI addressing the current value of Potential GDP.