Steady-state growth

Emanuel Kohlscheen and Jouchi Nakajima

No 812, BIS Working Papers from Bank for International Settlements

Abstract: We compute steady-state economic growth - defined as the rate of growth that the economy would converge to in the absence of new shocks. This rate can be computed in real-time by means of a parsimonious time-varying parameter (TVP) VAR model. Our procedure offers a relatively agnostic estimation of benchmark equilibrium growth rates. Estimates show that the steady-state GDP growth rate in the case of the United States declined from just above 3% per year in the 1990s to 2.4% at present. Results for other six advanced economies and the euro area indicate that the steady-state growth rate, which is consistent with stable inflation and financial conditions, has been relatively stable since 2010 in most cases in spite of a recent slowdown in actual GDP growth rates.

Keywords: economic growth; financial conditions; inflation; monetary policy; potential output; time-varying (search for similar items in EconPapers)
JEL-codes: C11 C15 E30 O40 (search for similar items in EconPapers)
Pages: 20 pages
Date: 2019-09
New Economics Papers: this item is included in nep-ets and nep-mac
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Journal Article: Steady‐state growth (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:bis:biswps:812

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