This Article Full Text (PDF) References Alert me when this article is cited Alert me if a correction is posted Services Email this article to a friend Similar articles in this journal Alert me to new issues of the journal Add to Saved Citations Download to citation manager Request Permissions Request Reprints Add to My Marked Citations Citing Articles Citing Articles via Scopus Google Scholar Articles by Adam, C. Articles by Cobham, D. Social Bookmarking                         What's this?

USING REAL-TIME OUTPUT GAPS TO EXAMINE PAST AND FUTURE POLICY CHOICES

University of Oxford

David Cobham

Heriot-Watt University, d.cobham{at}hw.ac.uk

Alternative measures of the UK output gap are considered for 1984-2007. The real-time series is strongly affected by the rolling-time estimation of the trend, and produces a picture of the business cycle which is not consistent with contemporary perceptions of the large fluctuations of the late 1980s and early 1990s. A new, 'nearly-real', measure developed here may be better for estimating historical reaction functions. In the context of the current recession, none of these mechanically derived measures of the output gap are useful. Policymakers should make careful estimates of the likely fall in potential output on the basis of other information.

Key Words: Output gap • real-time • quasi-real • nearly real • Taylor rule

National Institute Economic Review, Vol. 210, No. 1, 98-110 (2009)
DOI: 10.1177/0027950109354405


CiteULike    Complore    Connotea    Del.icio.us    Digg    Reddit    Technorati    Twitter    What's this?