System estimates of potential output and the NAIRU
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.
Volume (Year): 24 (1999)
Issue (Month): 3 ()
|Note:||received: June 1997/final version received: September 1998|
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