A New Methodology for Estimating the Output Gap in the United States

June 30, 2015

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

The gap between potential and actual output—the output gap—is a key variable for policymaking. This paper adapts the methodology developed in Blagrave and others (2015) to estimate the path of output gap in the U.S. economy. The results show that the output gap has considerably shrunk since the Great Recession, but still remains negative. While the results are more robust than other existing methodologies, there is still significant uncertainty surrounding the estimates.

Subject: Capacity utilization, Inflation, Labor, Labor force participation, Output gap, Potential output, Prices, Production

Keywords: capacity utilization, Capacity utilization, downside inflation pressure, Global, HP filter, Inflation, inflation expectation, Labor force participation, Macroeconomic Modeling, Output Gap, output gap level, PCE inflation, Potential Output, WP

Pages:
17
Volume:
2015
DOI:
https://doi.org/10.5089/9781513507569.001
Issue:
144
Series:
Working Paper No. 2015/144
Stock No:
WPIEA2015144
ISBN:
9781513507569
ISSN:
1018-5941

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