Orphanides (2001) finds the estimates of output gap
with official records of final data and compared these with most recent estimates of the output gaps
I measure output gaps
by assuming Okun's law and a 5 percent natural rate of unemployment: y = -2(u - 5).
We then examine the relation between the world budget surplus factor and estimated world factors in national output gaps
, equity valuation ratios, unexpected inflation, and military spending.
At their peak in late 2007, the MVHP versions of output gaps
were higher and after the crisis lower than those of the standard HP versions.
t] are the inflation rates, output gaps
, and short-term nominal interest rates, respectively, at time t.
Under this interpretation, both inflation and deflation distort the relative prices of goods; and positive and negative output gaps
move households away from their desired allocation of time between labor and leisure.
A, Taylor 1993 puts equal weight on the inflation and output gaps
Should growth turn out lower than expected, there is a risk that very large output gaps
would lead to deflation in some countries, with damaging consequences where debt burdens remain high," the IMF said in a document presented at a G20 meeting in Mexico last week.
These models exploit reduced-form equations and the output gaps
obtained from their methods are a nonaccelerating-inflation or constant-inflation measure.
However, an inertial rule is also identical to one where the Committee is not simply responding to today's inflation and today's output gap
, but one where the Committee takes into account past inflations and past output gaps
The peaks associated with these two detrending methodologies indicate output gaps
of opposite sign for some bservations, reflecting the pervasive nature of model uncertainty in our US data.
Regarding the short term, though I can see that output gaps
are extremely hard to measure, the most reasonable guess is that the current gap remains substantial.