Advanced Search
MyIDEAS: Login

Measuring the Natural Output Level by DSGE Models: An Empirical Investigation for Switzerland

Contents:

Author Info

  • Stefan Leist
  • Klaus Neusser

Abstract

The output gap plays an important role in the assessment and conduct of monetary policy. Most of the current literature, however, relies on filtering procedures which use ad hoc smoothness arguments for identification. Furthermore, they are subject to end-of-sample problems and do not provide estimates of the output gap based on economic theory. In contrast, our model-based approach relies on a precise definition of the natural level of output and consequently of the output gap. This paper provides, for the first time, an estimate of the output gap based on a DSGE small open economy model for Switzerland. We use Bayesian econometrics to derive an estimate of the output gap, which is then compared to some alternatives. Except for the last years, our measure of the output gap is close to zero most of the time. This suggests that price rigidities play a minor role in the propagation of the Swiss business cycle. We show that our estimate produces sensible and robust results which encourage further research.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.sjes.ch/papers/2010-I-11.pdf
Download Restriction: no

Bibliographic Info

Article provided by Swiss Society of Economics and Statistics (SSES) in its journal Swiss Journal of Economics and Statistics.

Volume (Year): 146 (2010)
Issue (Month): I (March)
Pages: 275-300

as in new window
Handle: RePEc:ses:arsjes:2010-i-11

Contact details of provider:
Postal: c/o SNB/BNS, B├Ârsenstrasse 15, PO Box 2800, CH-8022 Z├╝rich
Phone: +41 (0)44 631 32 34
Fax: +41 (0)44 631 39 01
Email:
Web page: http://www.sjes.ch
More information through EDIRC

Related research

Keywords: DSGE models; Bayesian econometrics; output gap; natural level of output; small open economy;

Find related papers by JEL classification:

References

No references listed on IDEAS
You can help add them by filling out this form.

Citations

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:ses:arsjes:2010-i-11. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Peter Steiner).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.