Estimating the size of the output gap is highly challenging, given the drawbacks in models and data, but pooling models can help, researchers from the Central Bank of Colombia find.

Their paper, Measuring the unmeasurable, notes that different models tend to produce different estimates. Results also change over time owing to structural changes in the economy or revisions in the data. Lags in publication of national accounts data add further problems.

The authors – Karen Pulido-Mahecha, Sergio