Comparing measures of potential output

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Comparing measures of potential output

Show simple item record Guisinger, Amy Y. Owyang, M. T. Shell, H. G. 2019-05-06T14:32:42Z 2019-05-06T14:32:42Z 2018
dc.identifier.citation Guisinger, A. Y., M. T. Owyang, and H. G. Shell (2018) "Comparing measures of potential output" Federal Reserve Bank of St. Louis Review, Fourth Quarter: 297-316. en_US
dc.description.abstract One of the goals of stabilization policy is to reduce the output gap—the difference between potential and actual output—during downturns. Potential output, however, is an unobserved variable whose definition can vary. For example, some view potential output as the level of output that can be produced when employment is at the natural rate. Others use trend measures of output to measure potential. We survey some of these measures using both full-sample data (all of the data that would be available through June 2017) and real-time data (the actual data that would have been available at different points in the sample). We construct six different measures of potential: a linear trend, a quadratic trend, the Congressional Budget Office measure, and three filtered trends. We compare these measures across methods and across time. We also use the measures to compute the monetary policy prescription in a standard interest rate rule and find very little difference across methods. en_US
dc.language.iso en_US en_US
dc.publisher Federal Reserve Bank of St. Louis Review en_US
dc.title Comparing measures of potential output en_US
dc.type Article en_US
dc.identifier.doi 10.20955/r.100.297-316

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