Estimates of Potential Output and the Neutral Rate for the U.S. Economy
32 Pages Posted: 1 Aug 2018
Date Written: July 2018
Estimates of potential output and the neutral short-term interest rate play important roles in policy making. However, such estimates are associated with significant uncertainty and subject to significant revisions. This paper extends the structural multivariate filter methodology by adding a monetary policy block, which allows estimating the neutral rate of interest for the U.S. economy. The addition of the monetary policy block further improves the reliability of the structural multivariate filter.
Keywords: United States, Western Hemisphere, Potential output, Macroeconomic Modeling, Neutral Rate, Model Construction and Estimation, Monetary Policy (Targets, Instruments, and Effects)
JEL Classification: C51, E32, E52, E31
Suggested Citation: Suggested Citation