Real-Time Estimation of the Output Gap in Japan and its Usefulness for Inflation Forecasting and Policymaking

Koichiro Kamada

No 2004,14, Discussion Paper Series 1: Economic Studies from Deutsche Bundesbank

Abstract: This paper examines the methods used by the Bank of Japan for the estimation of the output gap. Attention is paid to the real-time estimation problem. After reviewing the evolution of output gap estimation at the Bank, I discuss advantages and disadvantages of the various output gap measures. First, I examine the usefulness of the output gap for inflation forecasting and show that the real-time output gap sometimes includes much noise. Second, I investigate the implications of the real-time estimation problem for the policy evaluation. Third, I exploit TANKAN to enhance the usefulness of the real-time output gap.

Keywords: output gap; real-time estimation; inflation forecasting; Taylor Rule (search for similar items in EconPapers)
JEL-codes: E31 E32 E52 E58 (search for similar items in EconPapers)
Date: 2004
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Citations: View citations in EconPapers (15)

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Journal Article: Real-time estimation of the output gap in Japan and its usefulness for inflation forecasting and policymaking (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:bubdp1:2159

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