Estimating the Output Gap in Real Time
نویسنده
چکیده
I propose a novel method of estimating the potential level of U.S. GDP in real time. The proposed wage-based measure of economic potential remains virtually unchanged when new data are released. The distance between current and potential output – the output gap – satisfies Okun’s law and outperforms many other measures of slack in forecasting inflation. Thus, I provide a robust statistical tool useful for understanding current economic conditions and guiding policymaking. JEL codes: C18,C80,E01
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