Estimating Potential Output with a Multivariate Filter
38 Pages Posted: 1 Feb 2011
Date Written: December 2010
This paper develops a simple model for measuring potential output that uses data on inflation, unemployment, and capacity utilization. We apply the model to 10 countries, in addition to the United States and the euro area. While there is a substantial amount of uncertainty around our estimates, we find that the financial crisis has resulted in a reduction in potential output.
Keywords: Cross country analysis, Economic growth, Economic models, Financial crisis, Fiscal policy, Global Financial Crisis 2008-2009, Industrial production, Inflation, Monetary policy, Unemployment
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