The information content of capacity utilisation rates for output gap estimates
Open access
Date
2010-11Type
- Working Paper
ETH Bibliography
yes
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Abstract
From a theoretical perspective, the output gap is probably the most comprehensive and convincing concept to describe the cyclical position of an economy. Unfortunately, for practical purposes, the concept depends on the determination of potential output, which is an inherently unobservable variable. In this paper, we examine whether the real-time estimates of the output gap as published by the OECD can be improved by referring to measures of physical capital capacity utilisation from business tendency surveys. These data relate directly to the stress on the current capacity to produce goods and services and are not revised. Our real-time panel data set comprises 22 countries at an annual frequency with data vintages from 1995 to 2009. We show that the real-time output gaps are informationally inefficient in the sense that survey data available in real time can help produce estimates that are significantly closer to later releases of output gap estimates. Show more
Permanent link
https://doi.org/10.3929/ethz-a-010703548Publication status
publishedJournal / series
KOF Working PapersVolume
Publisher
KOF Swiss Economic Institute, ETH ZurichSubject
Output gap; BRUTTOINLANDSPRODUKT; DATA COLLECTION (MATHEMATICAL STATISTICS); DATENERHEBUNG (MATHEMATISCHE STATISTIK); Survey data; ECONOMIC PRODUCTIVITY; GROSS DOMESTIC PRODUCT; RESSOURCENNUTZUNG (WIRTSCHAFT); Real-time analysis; WIRTSCHAFTLICHE PRODUKTIVITÄT; RESOURCES EXPLOITATION (ECONOMY); Capacity utilisationOrganisational unit
02525 - KOF Konjunkturforschungsstelle / KOF Swiss Economic Institute
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ETH Bibliography
yes
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