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The Utilization-Adjusted Output Gap: Is the Russian Economy Overheating?
Author:
Nienke Oomesnull

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and
Oksana Dynnikovanull

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Series:
IMF Working Papers
Volume/Issue:
Volume 2006: Issue 068
Language:
English
Publication Date:
01 Mar 2006
DOI:
https://doi.org/10.5089/9781451863284.001
ISBN:
9781451863284
ISSN:
1018-5941
Pages:
46
Keywords:
WP; inflation rate; Phillips curve; utilization rate
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.
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This paper estimates the output gap in Russia using a utilization-adjusted production function approach, which we argue is preferable to traditional output gap methods. The approach amounts to (1) using available surveys to estimate the "natural rates" of capacity and labor utilization above which inflation begins to accelerate; (2) estimating a production function with utilization-adjusted capital and labor inputs; and (3) defining potential output as the level of output obtained when both capital and labor are at their estimated natural rates. The results suggest that the output gap in Russia was negative between 1999 and 2003, but may have recently become positive, thus contributing to inflationary pressures.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund
Volume 2006: Issue 068