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Simultaneous Determination of NAIRU, Output Gaps, and Structural Budget Balances: Swedish Evidence

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Economists are often concerned with estimates of three unobservable variables: the NAIRU, the output gap, and the structural budget balance. Although the main purpose of many existing methods is to remove effects stemming from the same business cycle, the three variables are estimated in different models. In this paper, we propose a new unifying approach to estimate NAIRU, output gaps, and structural budget balances in the same model. A structural VAR model, designed to take the non-stationarity of European unemployment into account, is applied and we provide Swedish evidence using yearly data for the period 1950-2004.

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  • Hjelm, Göran, 2003. "Simultaneous Determination of NAIRU, Output Gaps, and Structural Budget Balances: Swedish Evidence," Working Papers 81, National Institute of Economic Research.
    • Handle: RePEc:hhs:nierwp:0081
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    1. Paul van den Noord, 2000. "The Size and Role of Automatic Fiscal Stabilizers in the 1990s and Beyond," OECD Economics Department Working Papers 230, OECD Publishing.
    2. Pierre St-Amant & Simon van Norden, 1997. "Measurement of the Output Gap: A Discussion of Recent Research at the Bank of Canada," Technical Reports 79, Bank of Canada.
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    1. Martin Larch & João Nogueira Martins, 2007. "Fiscal indicators - Proceedings of the the Directorate-General for Economic and Financial Affairs Workshop held on 22 September 2006 in Brussels," European Economy - Economic Papers 2008 - 2015 297, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    2. Afonso, Antonio & Claeys, Peter, 2008. "The dynamic behaviour of budget components and output," Economic Modelling, Elsevier, vol. 25(1), pages 93-117, January.
    3. Fregert, Klas & Pehkonen, Jaakko, 2008. "Causes of structural unemployment in Finland and Sweden 1990-2004," Working Papers 2008:14, Lund University, Department of Economics.
    4. António Afonso & Peter Claeys, 2006. "The dynamic behaviour of budget components and output – the cases of France, Germany, Portugal, and Spain," Working Papers Department of Economics 2006/26, ISEG - Lisbon School of Economics and Management, Department of Economics, Universidade de Lisboa.

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