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System estimates of potential output and the NAIRU


  • Mikael Apel

    () (Economics Department, Sveriges Riksbank, S-103 37 Stockholm, Sweden)

  • Per Jansson

    () (Economics Department, Sveriges Riksbank, S-103 37 Stockholm, Sweden)


This paper proposes a new approach for estimating potential output and the NAIRU. The methodology models these key unobservable economic variables as latent stochastic trends within a trivariate system of observables comprising information on unemployment, GDP, and inflation. Identification is achieved through the use of a standard version of Okun's law and a Phillips curve. The performance of the procedure is investigated using Swedish quarterly data covering the time period 1970:1-1996:3.

Suggested Citation

  • Mikael Apel & Per Jansson, 1999. "System estimates of potential output and the NAIRU," Empirical Economics, Springer, vol. 24(3), pages 373-388.
  • Handle: RePEc:spr:empeco:v:24:y:1999:i:3:p:373-388 Note: received: June 1997/final version received: September 1998

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    References listed on IDEAS

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    More about this item


    Kalman filter · NAIRU · Okun's law · Phillips curve · potential output · structural time-series models · unobserved-components models;

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles


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