Output gap
Loose financial conditions predict output gap – NY Fed paper
Policy-makers can make significant welfare gains by greater focus on financial conditions – researchers
Open and closed economy central banks react differently to inflation – research
Some economies respond more strongly to certain variables, Fernando Leibovici says
Minneapolis Fed president calls on Fed to ‘re-tool’ labour market analysis
Wages are a better means of estimating labour market slack, Kashkari says
San Francisco Fed researcher seeks to improve Phillips curve
Introducing an “interaction variable” can increase predictive performance, researcher says
Globalisation is helping to flatten Phillips curve – Fed paper
Price sensitivity to output changes is significantly weaker in high trade-intensive industries
Dallas Fed paper analyses monetary policy rules
Results are in “stark contrast” to previous research, authors say
Global output gap matters for inflation – BIS paper
Authors find domestic and global output gaps both important, but effects differ across economies
Fed adviser sets out new equilibrium rate model
Long-term interest rates are more important for spending decisions, author claims
Malaysia central bank dismisses concerns over government cash handout
BNM says cash handout idea was “first mooted” by its board, dismissing the suggestion it was designed to “tempt” the Malaysian people
Google’s Hal Varian on how technology is changing economics
Google’s chief economist talks to Christopher Jeffery about how big data and machine learning are facilitating changes in economic thinking; discusses the impact technical breakthroughs may have for central banks
BoE’s new MPC members disagree on future path of hikes
New deputy Dave Ramsden sees current degree of slack to be too great to warrant removal of stimulus, while Tenreyro believes it cannot “persist for too long”
RBNZ paper develops ‘intuitive and reliable’ output gap measure
Authors turn to a “Beveridge-Nelson filter” to produce an output gap estimate that performs better than those produced by other filtering techniques
Thai governor calls for rethink of monetary policy frameworks
New structure should systematically acknowledge the negative impact of monetary policy; Santiprabhob recognises macroprudential cannot take all the strain
Output gap in euro area is much larger than official estimates – paper
Official estimates predict output gap 3–4% less negative than author’s results; current models do not “adequately capture” inflation developments
New model shows eurozone output gap remains large, researchers argue
Other models fail to capture interplay of inflation and output, paper says
LatAm policy-makers were possibly ‘excessively optimistic’ over economic potential, BIS paper says
Downplaying commodity super-cycle may have led to incorrect assessment of economic potential in Latin America, paper says; may have skewed monetary and fiscal policies
Norges Bank paper offers insights on when to ‘lean against the wind’
Norges Bank working paper investigates the extent monetary policies should actively aim at mitigating the build-up of financial imbalances; using rates to curb credit growth could lower output
IMF paper proposes refinements to potential output estimation
Researchers use an adapted ‘multivariate filter’ that aims to improve upon other methods of estimating potential output, although they admit the result is probably only the ‘least worst’ option
IMF paper attempts to pin down output gap
Members of the Fund's European department build new models incorporating financial frictions to estimate the output gap in the US during the Great Moderation and beyond
Central banks wrong to try and close output gap, says RBNZ's McDermott
Reserve Bank of New Zealand assistant governor John McDermott says the role of monetary policy is to keep inflation predictably low, not try and boost output
Revisions to output gap estimates can skew fiscal stabilisers, IMF says
Working paper proposes a ‘rule of thumb' to take into account the likelihood of revisions to estimates of potential GDP when activating fiscal stabilisers
Borio-led BIS team proposes new approach to measure output gap
Trying to calculate the output gap using the Phillips curve is problematic, say Basel-based economists; new approach finds financial cycle proxies add ‘significant information' to the estimate
Bank of Canada deputy takes on 'elusive' potential output
Agathe Côté says measuring potential output is a 'formidable' task; notes Canadian output gap is 'sizeable' and potential growth rate likely to remain at 2% in coming years
Eurozone inflation and output do move in step, says IMF working paper
Researchers argue co-movement of inflation and output is observable in the eurozone at ‘business cycle frequencies', confirming New Keynesian models to demand shocks