Alternative Methods of Estimating Potential Output and the Output Gap: An Application to Sweden
March 1, 2000
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Summary
This paper reviews a number of different methods that can be used to estimate potential output and the output gap. Measures of potential output and the output gap are useful to help identify the scope for sustainable noninflationary growth and to allow an assessment of the stance of macroeconomic policies. The paper then compares results from some of these methods to the case of Sweden, showing the range of estimates.
Subject: Inflation, Labor, Output gap, Potential output, Prices, Production, Unemployment, Unemployment rate
Keywords: Business Cycles, constructed output gap, demand shock, Detrending, economic theory, HP filter, Inflation, Output Gap, output gap estimate, Potential Output, price level, production function, production function approach, Sweden, Unemployment, Unemployment rate, Unobserved Components Models, Vector Autoregression, WP
Pages:
33
Volume:
2000
DOI:
Issue:
059
Series:
Working Paper No. 2000/059
Stock No:
WPIEA0592000
ISBN:
9781451847932
ISSN:
1018-5941
Notes
Sweta Chaman Saxena is from the University of Pittsburgh.
