Estimating the output gap in real time

Anton Cheremukhin

Staff Papers, 2013, issue Dec

Abstract: I propose a novel method of estimating the potential level of U.S. GDP in real time. The proposed wage-based measure of economic potential remains virtually unchanged when new data are released. The distance between current and potential output ? the output gap ? satisfies Okun?s law and outperforms many other measures of slack in forecasting inflation. Thus, I provide a robust statistical tool useful for understanding current economic conditions and guiding policymaking.

Keywords: economic potential; estimation; Output gap (search for similar items in EconPapers)
JEL-codes: C18 C80 E01 (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (1)

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