Why Is It So Hard To Measure the Current Output Gap ?

  title={Why Is It So Hard To Measure the Current Output Gap ?},
  author={Simon van Norden},
In order for time series estimates of the output gap to be useful to policy makers, this paper argues that two factors will be critical. First, they must be able to produce an estimate of thecurrent output gap based only on past information. Put another way, to evaluate the performance of such estimators, we should focus on their properties as fil er rather thansmoothers . Second, the decomposition of actual output into potential output and the output gap must not be based on arbitrary… CONTINUE READING

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