Measuring Potential Output within a State-Space Framework

@inproceedings{Kichian1999MeasuringPO,
  title={Measuring Potential Output within a State-Space Framework},
  author={Maral Kichian},
  year={1999}
}
In this paper we measure potential output (and consequently the output gap) using state-space models. Given that the estimated output gap is used as an indicator to measure the extent of inflationary pressures in the economy, we evaluate the use of such models for the implementation of monetary policy. Our starting point is the Gerlach and Smets (1997) unobserved-components model, which they applied to the G7 countries. After subjecting this model to various diagnostic tests, we modify certain… CONTINUE READING

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