Cover IMF Working Papers
Buy Book in Print
Measuring a Roller Coaster: Evidenceon the Finnish Output Gap
Author:
Mr. Andreas Billmeier null

Search for other papers by Mr. Andreas Billmeier in
Current site
Google Scholar Close
Series:
IMF Working Papers
Volume/Issue:
Volume 2004: Issue 057
Language:
English
Publication Date:
01 Apr 2004
DOI:
https://doi.org/10.5089/9781451847802.001
ISBN:
9781451847802
ISSN:
1018-5941
Pages:
36
Keywords:
WP; output gap measure; BQ output gap; real GDP; Finland; output gap; potential output; inflation forecasting; output gap estimation method; HP estimation approach; output gap estimate; Unemployment rate; Total factor productivity; Inflation
Legal-disclaimer:
IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
Download PDF (270 KB) Download Epub
The output gap-which measures the deviation of actual output from its potential-is frequently used as an indicator of slack in an economy. This paper estimates the Finnish output gap using various empirical methods. It evaluates these methods against economic history and each other by a simulated out-of-sample forecasting exercise for Finnish CPI inflation. Only two gap measures, stemming from a frequency domain approach and the Blanchard-Quah decomposition, perform better than the naïve prediction of no change in inflation-but do not improve upon a simple autoregressive forecast. The pronounced volatility of output in Finland makes it particularly difficult to estimate potential output, producing considerable uncertainty about the size (and sign) of the gap.
  • Collapse
  • Expand
Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund