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Using European Commission real-time data, we show that potential output (PO) estimates were substantially and persistently revised downwards after the Great Recession. We decompose PO revisions into revisions of the capital stock, trend labor, and trend total-factor productivity (TFP)....
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unemployment. This calls in question both the interpretation of potential output estimates as barriers to more vigorous inflation …
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using output, inflation and unemployment systems. In order to assess the reliability of an output gap estimate two criteria … are adopted. Firstly, the estimate should have forecasting power over inflation. Secondly, the ex post statistical … hand, our UC models for the output gap have limited forecasting power for inflation, since they underperform an arbitrary …
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The output gap is a key variable of business cycle analysis and policy. Obtaining reliable estimates for it, is very difficult, though. Most real-time estimates are frequently revised over time. The idea of this paper is to use various indicators, for example from business surveys, that (i) were...
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