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Output Gaps in European Monetary Union. New Insights from Input Augmentation in the Technological Progress

Author

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  • Dimitz, Maria Antoinette

    (Dimitz; Foreign Research Division, Oesterreichische Nationalbank)

Abstract

Output gaps for ten European countries and the USA are estimated based on a CES production function with input augmentation in the technological progress. The substitution parameter is estimated from the coefficients of the labor and capital demand functions. The estimation is done using Johansen's cointegration method. For six of the eleven countries analyzed, the use of the Cobb Douglas form would not be appropriate. The output gaps show a similar cyclical pattern for all countries. They remain mostly within +/-3% for five countries and within +/-5% for another four. Separating labor- and capital-augmenting technological progress gives insight into the driving forces of growth.

Suggested Citation

  • Dimitz, Maria Antoinette, 2001. "Output Gaps in European Monetary Union. New Insights from Input Augmentation in the Technological Progress," Economics Series 102, Institute for Advanced Studies.
    • Handle: RePEc:ihs:ihsesp:102
    as

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    File URL: https://irihs.ihs.ac.at/id/eprint/1362
    File Function: First version, 2001
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    References listed on IDEAS

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    Cited by:

    1. Álvarez, Luis J. & Gómez-Loscos, Ana, 2018. "A menu on output gap estimation methods," Journal of Policy Modeling, Elsevier, vol. 40(4), pages 827-850.

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    Keywords

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    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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