An approach to decomposing and interpreting the inflation process is proposed. It suggests that the low U.S. inflation rate in recent years reflects a structural development, but that the low levels of unemployment may be a mainly cyclical phenomenon.

A new approach is proposed for estimating potential output and the NAIRU. Identification is achieved using Okun's law and a Phillips curve. The performance of the methodology is exemplified using data from Canada, the UK, and the US.

This paper proposes a new approach for estimating potential output and the NAIRU. The methodology models these key unobservable economic variables as latent stochastic trends within a trivariate system of observables comprising information on unemployment, GDP, and inflation. Identification is...