Measuring Potential Growth with an Estimated DSGE Model of Japan’s Economy

Takuji Fueki, Ichiro Fukunaga, Hibiki Ichiue () and Toyoichiro Shirota
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Takuji Fueki: Bank of Japan, Indiana University

International Journal of Central Banking, 2016, vol. 12, issue 1, 1-32

Abstract: In this paper, we calculate the potential output and the output gap using a Bayesian-estimated DSGE model of Japan’s economy. For bridging the gap with conventional measures, we define our measure of potential output as a component of the efficient output generated only by persistent growth rate shocks. Our potential growth displays a high degree of smoothness and moves closely with conventional measures. Moreover, the output gap from our measure of potential output shows better forecasting performance for inflation—in particular, at short horizons—than other measures of output gap.

JEL-codes: E32 E37 O41 O47 (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (17)

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Related works:
Working Paper: Measuring Potential Growth with an Estimated DSGE Model of Japan's Economy (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:ijc:ijcjou:y:2016:q:1:a:1

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