Output Gap Uncertainty And Real Time Monetary Policy
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Output Gap Uncertainty And Real Time Monetary Policy
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Author : Francesco Grigoli
language : en
Publisher: International Monetary Fund
Release Date : 2015-01-23
Output Gap Uncertainty And Real Time Monetary Policy written by Francesco Grigoli and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2015-01-23 with Business & Economics categories.
Output gap estimates are subject to a wide range of uncertainty owing to data revisions and the difficulty in distinguishing between cycle and trend in real time. This is important given the central role in monetary policy of assessments of economic activity relative to capacity. We show that country desks tend to overestimate economic slack, especially during recessions, and that uncertainty in initial output gap estimates persists several years. Only a small share of output gap revisions is predictable ex ante based on characteristics like output dynamics, data quality, and policy frameworks. We also show that for a group of Latin American inflation targeters the prescriptions from typical monetary policy rules are subject to large changes due to output gap revisions. These revisions explain a sizable proportion of the deviation of inflation from target, suggesting this information is not accounted for in real-time policy decisions.
Structural Balance Targeting And Output Gap Uncertainty
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Author : Eugen Tereanu
language : en
Publisher: International Monetary Fund
Release Date : 2014-06-13
Structural Balance Targeting And Output Gap Uncertainty written by Eugen Tereanu and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2014-06-13 with Business & Economics categories.
Potential output estimation plays a crucial role in conducting fiscal policy based on structural balances. Difficulties in estimating potential output could lead to an erroneous policy stance with a consequent impact on growth. This paper analyzes historical data on revisions of actual and potential growth in the European Union and the implication of these revisions for the measurement of fiscal effort using the cyclically-adjusted primary balance (CAPB). It finds that revisions in output gap estimates were large, at almost 11⁄2 percent of potential GDP on average. Revisions in potential GDP also contributed significantly to revisions in the estimated CAPB, especially during the crisis years. Given these findings and historical correlations, it proposes an indicative rule of thumb for reducing errors in the measurement of fiscal effort by factoring in that about 30 percent of revisions in actual growth capture changes in potential growth. In other words, the standard advice of “letting automatic stabilizers operate fully” in response to a positive/negative growth shocks likely implies a strengthening/weakening of the structural position.
How Informative Are Real Time Output Gap Estimates In Europe
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Author : Mr.Alvar Kangur
language : en
Publisher: International Monetary Fund
Release Date : 2019-09-20
How Informative Are Real Time Output Gap Estimates In Europe written by Mr.Alvar Kangur and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2019-09-20 with Business & Economics categories.
We study the properties of the IMF-WEO estimates of real-time output gaps for countries in the euro area as well as the determinants of their revisions over 1994-2017. The analysis shows that staff typically saw economies as operating below their potential. In real time, output gaps tend to have large and negative averages that are largely revised away in later vintages. Most of the mis-measurement in real time can be explained by the difficulty in predicting recessions and by overestimation of the economy’s potential capacity. We also find, in line with earlier literature, that real-time output gaps are not useful for predicting inflation. In addition, countries where slack (and potential growth) is overestimated to a larger extent primary fiscal balances tend to be lower and public debt ratios are higher and increase faster than projected. Previous research suggests that national authorities’ real-time output gaps suffer from a similar bias. To the extent these estimates play a role in calibrating fiscal policy, over-optimism about long-term growth could contribute to excessive deficits and debt buildup.
Imperfect Knowledge And Monetary Policy
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Author : Vítor Gaspar
language : en
Publisher: Cambridge University Press
Release Date : 2006-02-16
Imperfect Knowledge And Monetary Policy written by Vítor Gaspar and has been published by Cambridge University Press this book supported file pdf, txt, epub, kindle and other format this book has been release on 2006-02-16 with Business & Economics categories.
Based on lectures given as part of The Stone Lectures in Economics, this book discusses the problem of formulating monetary policy in practice, under the uncertain circumstances which characterize the real world. The first lecture highlights the limitations of decision rules suggested by the academic literature and recommends an approach involving, first, a firm reliance on the few fundamental and robust results of monetary economics and, secondly, a pragmatic attitude to policy implementation, taking into consideration lessons from central banking experience. The second lecture revisits Milton Friedman's questions about the effects of active stabilization policies on business cycle fluctuations. It explores the implications of a simple model where the policy maker has imperfect knowledge about potential output and the private sector forms expectations according to adaptive learning. This lecture shows that imperfect knowledge limits the scope for active stabilization policy and strengthens the case for conservatism.
Reading The Stars
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Author : Peter D. Williams
language : en
Publisher:
Release Date : 2020-07-24
Reading The Stars written by Peter D. Williams and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2020-07-24 with categories.
Following the global financial crisis, significant uncertainty has existed around the U.S. economy's steady state equilibrium. This paper uses a factor model to provide a new approach to estimating "the stars" (i.e. the neutral interest rate, maximum employment, and the level and growth rate of potential output) that are most consistent with a medium-term equilibrium where inflation converges to the FOMC's two percent target. It is applicable to any country with an inflation targeting central bank. It also explicitly incorporates estimates of the extensive margin of slack in the labor market, which has proven to be an important factor in describing the post-financial crisis landscape.
The Taylor Rule And The Transformation Of Monetary Policy
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Author : Robert Leeson
language : en
Publisher: Hoover Press
Release Date : 2013-09-01
The Taylor Rule And The Transformation Of Monetary Policy written by Robert Leeson and has been published by Hoover Press this book supported file pdf, txt, epub, kindle and other format this book has been release on 2013-09-01 with Political Science categories.
A contributors' "who's who" from the academic and policy communities explain and provide perspectives on John Taylor's revolutionary thinking about monetary policy. They explore some of the literature that Taylor inspired and help us understand how the new ways of thinking that he pioneered have influenced actual policy here and abroad.
Efficient Estimation Of Forecast Uncertainty Based On Recent Forecast Errors
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Author : Malte Knüppel
language : en
Publisher:
Release Date : 2009
Efficient Estimation Of Forecast Uncertainty Based On Recent Forecast Errors written by Malte Knüppel and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2009 with categories.
Fiscal Policy Making In The European Union
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Author : Martin Larch
language : en
Publisher: Routledge
Release Date : 2009-12-16
Fiscal Policy Making In The European Union written by Martin Larch and has been published by Routledge this book supported file pdf, txt, epub, kindle and other format this book has been release on 2009-12-16 with Business & Economics categories.
""Fiscal policy making in the European Union is a national prerogative that is carried out and co-ordinated within the remits of the Stability and Growth Pact (SGP). The SGP Member States have agreed upon a rules-based framework which, abstracting from operational details, aims to ensure long-term sustainability of public finances while allowing for short-term fiscal stabilization. The success of the EU fiscal framework depends to a large extent on the effectiveness and accuracy of the tool-kit of indicators and methods used at the EU level to monitor and assess the fiscal performance of the Member States vis-a-vis the requirements of the SGP. The contributions to this volume examine key aspects of the measurement of fiscal policy making in the context of the EU fiscal surveillance framework. They highlight strengths and weaknesses of current assessment practice, including innovations implied by the 2005 revision of the SGP." "--Jacket.
Nber Macroeconomics Annual 2004
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Author : Mark Gertler
language : en
Publisher: Mit Press
Release Date : 2005
Nber Macroeconomics Annual 2004 written by Mark Gertler and has been published by Mit Press this book supported file pdf, txt, epub, kindle and other format this book has been release on 2005 with Business & Economics categories.
The NBER Macroeconomics Annual presents pioneering work in macroeconomics by leading academic researchers addressed to a broad audience of public policymakers as well as to the academic community. Each paper is followed by comments and discussion to give a more complete context for the views expressed. The 2004 edition features a range of papers aimed at providing coherent and informative answers to such important questions as the effect of federal government debt on interest rates; the stochastic dimension of the American economy; the role of technology as a source of economic fluctuations; and the interaction of capital flows, fiscal policy, and monetary policies in developing countries, emerging markets, and OECD countries.
How Informative Are Real Time Output Gap Estimates In Europe
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Author : Mr.Alvar Kangur
language : en
Publisher: International Monetary Fund
Release Date : 2019-09-20
How Informative Are Real Time Output Gap Estimates In Europe written by Mr.Alvar Kangur and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2019-09-20 with Business & Economics categories.
We study the properties of the IMF-WEO estimates of real-time output gaps for countries in the euro area as well as the determinants of their revisions over 1994-2017. The analysis shows that staff typically saw economies as operating below their potential. In real time, output gaps tend to have large and negative averages that are largely revised away in later vintages. Most of the mis-measurement in real time can be explained by the difficulty in predicting recessions and by overestimation of the economy’s potential capacity. We also find, in line with earlier literature, that real-time output gaps are not useful for predicting inflation. In addition, countries where slack (and potential growth) is overestimated to a larger extent primary fiscal balances tend to be lower and public debt ratios are higher and increase faster than projected. Previous research suggests that national authorities’ real-time output gaps suffer from a similar bias. To the extent these estimates play a role in calibrating fiscal policy, over-optimism about long-term growth could contribute to excessive deficits and debt buildup.