inflation and wage inflation) into trend and cyclical components. To do so, it relies on several reduced form relationships … reasonable forecasting performance in particular in terms of GDP and core inflation vis-a-vis a set of benchmarks …

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 …

heterogeneity. On the one hand, the method uses information on real GDP, inflation, and the unemployment rate for each member state …