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A menu on output gap estimation methods

Luis Alvarez and Ana Gómez-Loscos ()

Journal of Policy Modeling, 2018, vol. 40, issue 4, 827-850

Abstract: This paper presents a review of output gap modeling techniques, which are of special interest for policy making institutions. We distinguish between univariate – which estimate trend output on the basis of actual output, without taking into account the information contained in other variables –, and multivariate methods — which incorporate useful information on some other variables, based on economic theory. We present the main advantages and drawbacks of the different methods.

Keywords: Output gap; Potential output; Business cycle; Trend output (search for similar items in EconPapers)
JEL-codes: E32 O4 (search for similar items in EconPapers)
Date: 2018
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DOI: 10.1016/j.jpolmod.2017.03.008

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