Estimating the Output Gap in Real Time

  • Anton Cheremukhin
  • Published 2013
I propose a novel method of estimating the potential level of U.S. GDP in real time. The proposed wage-based measure of economic potential remains virtually unchanged when new data are released. The distance between current and potential output – the output gap – satisfies Okun’s law and outperforms many other measures of slack in forecasting inflation… CONTINUE READING