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Is the output gap a useful indicator of inflation? Author info | Abstract | Publisher info | Download info | Related research | Statistics Iris Claus (Reserve Bank of New Zealand )
One of the main indicators of inflationary pressures used by the Reserve Bank of New Zealand is the output gap. The output gap is not directly observable and estimates have to be inferred from the data. This paper evaluates whether the output gap, however measured, is a good indicator of inflationary pressures in New Zealand. The results suggest that the output gap provides a useful signal to the monetary authority. When the output gap is positive (negative) two times out of three inflation will increase (decrease) in the next quarter and three times out of five it will increase (decrease) the following year.
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Paper provided by Reserve Bank of New Zealand in its series Reserve Bank of New Zealand Discussion Paper Series with number
DP2000/05.
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Length: 21p
Date of creation: Mar 2000Date of revision:
Handle: RePEc:nzb:nzbdps:2000/05Contact details of provider: Postal: P.O. Box 2498, Wellington Phone: 64 4 471-3767 Fax: 64 4 471-2270 Email: Web page: http://www.rbnz.govt.nz More information through EDIRC
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Find related papers by JEL classification: C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
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references Cited by : (explanations , Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile , click on "citations" and make appropriate adjustments.)
Victor Gaiduch & Benjamin Hunt, 2000.
"Inflation targeting under potential output uncertainty ,"
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DP2000/08, Reserve Bank of New Zealand.
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Todd E. Clark & Michael W. McCracken, 2003.
"The predictive content of the output gap for inflation : resolving in-sample and out-of-sample evidence ,"
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"Which Output Gap Measure Matters for the Arab Gulf Cooperation Council Countries (AGCC): The Overall GDP Output Gap or the Non-Oil Sector Output Gap? ,"
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11612, University Library of Munich, Germany.
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Odile Chagny & Jörg Döpke, 2001.
"Measures of the Output Gap in the Euro-Zone: An Empirical Assessment of Selected Methods ,"
Kiel Working Papers
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