A dynamic model to estimate the long-run trends in potential GDP
To estimate long-run growth based on the so-called potential GDP became a constant preoccupation among economists. However, one remaining problem in every long-run growth model is to estimate a persistent trend in labour productivity outside of it, in order to avoid the implicit circular relationship between actual productivity growth and potential level of production. Coming from recent literature on natural rate of unemployment estimation we used a specific methodology in order to estimate NAIRU in case of post-communist economies and based on it to evaluate the potential GDP. Taking into account that the “classic” Hodrick-Prescott method is in fact equivalent to an interpolation procedure, we used in our experiment other three filters demonstrating very similar output. Moreover, we conceived a simple autonomous model in order to estimate the growth of a so-called “pure” productivity independently from the actual level of employment and to compare its dynamics with that of natural rate of unemployment.
|Date of creation:||2006|
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- Laurence Ball & N. Gregory Mankiw, 2002.
"The NAIRU in Theory and Practice,"
Harvard Institute of Economic Research Working Papers
1963, Harvard - Institute of Economic Research.
- Laurence Ball & N Gregory Mankiw, 2002. "The NAIRU in Theory and Practice," Economics Working Paper Archive 475, The Johns Hopkins University,Department of Economics.
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"Strain and the inflation - unemployment relationship: a conceptual and empirical investigation,"
14017, University Library of Munich, Germany.
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"Productivity Growth and the Phillips Curve,"
Economics Working Paper Archive
450, The Johns Hopkins University,Department of Economics.
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- Albu, Lucian Liviu, 2008. "Strain and Inflation-Unemployment Relationship in Transitional Economies: A theoretical and empirical investigation," Working Papers of Institute for Economic Forecasting 081103, Institute for Economic Forecasting.
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