This paper investigates how the presence of pervasive financial frictions and large shocks changes optimal monetary policy prescriptions estimated dynamics in a New Keynesian model. We find that factors affect only to some extent. A nominal stabilization (with particular focus on targeting wage inflation) is still policy, although central bank now unable fully stabilize economic activity around...

Output gap estimates at the current edge are subject to severe revisions. This study analyzes whether monetary aggregates can be used to improve the reliability of early output gap estimates as proposed by several theoretical models. A real-time experiment shows that real M1 can improve output gap estimates for euro area data. For many periods the cyclical component of real M1 shows good result...

This paper analyses the impact of using different macroeconomic variables and output decompositions to estimate the euro area output gap. We estimate twelve multivariate unobserved components models with phase shifts being allowed between individual cyclical components. As output decomposition plays a central role in all multivariate models, three different output decompositions are utilised; t...

Several recent studies have used multivariate unobserved components models to identify the output gap and the NAIRU. A key assumption of these models is that one common cycle component, such as the output gap, drives the cyclical fluctuations in all variables included in the model. This paper also uses the multivariate approach to estimate the euro area output gap and the trends and cycles in o...

for helpful comments on earlier drafts. All remaining errors and omissions are the author's. Comments and criticisms are welcome. ABSTRACT This paper estimates potential output using a number of statistical trend methods and a Cobb Douglas production function. Two measures of the output gap using the Cobb Douglas production function method are estimated. One measure models technology as a linea...

Design and construction of a capacitor sensor with a precise readout system are described in this paper. A variable air-gap capacitive transducer was constructed and for signalmeasurement a successful attempt was made to exploit the capacitance changes in terms of the phase angle of the detected signal. The reported setup makes it possible to detect capacitance changes of the order of 2.5 fF in...