The Utilization-Adjusted Output Gap: Is the Russian Economy Overheating?

 
Author/Editor: Oomes, Nienke ; Dynnikova, Oksana
 
Publication Date: March 01, 2006
 
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Summary: This paper estimates the output gap in Russia using a utilization-adjusted production function approach, which we argue is preferable to traditional output gap methods. The approach amounts to (1) using available surveys to estimate the "natural rates" of capacity and labor utilization above which inflation begins to accelerate; (2) estimating a production function with utilization-adjusted capital and labor inputs; and (3) defining potential output as the level of output obtained when both capital and labor are at their estimated natural rates. The results suggest that the output gap in Russia was negative between 1999 and 2003, but may have recently become positive, thus contributing to inflationary pressures.
 
Series: Working Paper No. 06/68
Subject(s): Inflation | Russian Federation | Labor mobility | Labor markets

Author's Keyword(s): Output gap | capacity utilization | natural rate | Phillips curve | Russia
 
English
Publication Date: March 01, 2006
ISBN/ISSN: 0 / 1934-7073 Format: Paper
Stock No: WPIEA2006068 Pages: 46
Price:
US$15.00 (Academic Rate:
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