The output gap and inflation in U.S. data: an empirical note

Anindya Biswas

Economics Bulletin, 2015, vol. 35, issue 2, 841-845

Abstract: This paper analyzes the relationship between the output gap and inflation. This study uses a newly proposed flexible data-driven measure of the output gap and finds that such a distance weight-based measure of the ex-ante output gap (WAgap), has a significant and better in-sample relation with inflation in U.S from January, 1948 to August, 2013 compared to a prevalent ex-ante trend-based measure of the output gap. However, this study confirms the literature's conclusion that finding the out-of-sample/real-time predictability for inflation is most challenging, and the WAgap model provides only modest improvement over the benchmark historical mean model.

Keywords: Inflation predictability; Output gap; Real-time data; Beta-weighting scheme (search for similar items in EconPapers)
JEL-codes: E3 E5 (search for similar items in EconPapers)
Date: 2015-04-02
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.accessecon.com/Pubs/EB/2015/Volume35/EB-15-V35-I2-P87.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ebl:ecbull:eb-14-00475

Access Statistics for this article

More articles in Economics Bulletin from AccessEcon
Bibliographic data for series maintained by John P. Conley ().