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The Reserve Bank of New Zealand’s output gap indicator suite and its real-time properties

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The output gap is a key concept in monetary policy, reflecting pressures on resources in the economy. However, it is unobservable, and so must be estimated. This paper outlines a suite of indicators used by the Reserve Bank of New Zealand to inform estimates of the output gap. The paper discusses the real-time properties of the suite of indicators, and uses two metrics to evaluate the performance of each indicator. The best-performing indicators of the output gap are those based on labour market variables, but the difference in performance between the indicators is small enough that the entire suite should be considered.

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  • Jed Armstrong, 2015. "The Reserve Bank of New Zealand’s output gap indicator suite and its real-time properties," Reserve Bank of New Zealand Analytical Notes series AN2015/08, Reserve Bank of New Zealand.
  • Handle: RePEc:nzb:nzbans:2015/08
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    1. Byron Botha & Lauren Kuhn & Daan Steenkamp, 2020. "Is the Phillips curve framework still useful for understanding inflation dynamics in South Africa," Working Papers 10211, South African Reserve Bank.

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