{"product_id":"international-finance-discussion-papers-output-gaps-1288704445","title":"International Finance Discussion Papers: Output Gaps","description":"\u003cp\u003e\u003cstrong\u003eISBN:\u003c\/strong\u003e 1288704445\u003c\/p\u003e\u003cp\u003e\u003cstrong\u003eAuthor:\u003c\/strong\u003e Kiley, Michael T\u003c\/p\u003e\u003cp\u003e\u003cstrong\u003eCondition:\u003c\/strong\u003e New\u003c\/p\u003e\u003cp\u003eWhat is the output gap? There are many definitions in the economics literature, all of which have a long history. I discuss three alternatives: the deviation of output from its long-run stochastic trend (i.e., the \"Beveridge-Nelson cycle\"); the deviation of output from the level consistent with current technologies and normal utilization of capital and labor input (i.e., the \"production-function approach\"); and the deviation of output from \"flexible-price\" output (i.e., its \"natural rate\"). Estimates of each concept are presented from a dynamic-stochastic-general-equilibrium (DSGE) model of the U.S. economy used at the Federal Reserve Board. Four points are emphasized: The DSGE model's estimate of the Beveridge-Nelson gap is very similar to gaps from policy institutions, but the DSGE model's estimate of potential growth has a higher variance and substantially different covariance with GDP growth; the natural rate concept depends strongly on model assumptions and is not designed to guide nominal interest rate movements in \"Taylor\" rules in the same way as the other measures; the natural rate and production function trends converge to the Beveridge-Nelson trend; and the DSGE model's estimate of the Beveridge-Nelson gap is as closely related to unemployment fluctuations as those from policy institutions and has more predictive ability for inflation.\u003c\/p\u003e","brand":"Mia Karts","offers":[{"title":"Default Title","offer_id":51964271198496,"sku":"NEW1288704445","price":21.3,"currency_code":"USD","in_stock":false}],"url":"https:\/\/miakarts.com\/products\/international-finance-discussion-papers-output-gaps-1288704445","provider":"Miakarts Books","version":"1.0","type":"link"}