Did the Crisis Affect Potential Output?

Conventional Phillips-curve models that are used to estimate the output gap detect a substantial decline in potential output due to the present crisis. Using a multivariate state space model, we show that this result does not hold if the long run role of excess liquidity (that we estimate endogeneously) for inflation is taken into account.

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Year of publication:	2010-04
Authors:	El-Shagi, Makram
Institutions:	Institut für Wirtschaftsforschung Halle (IWH)
Subject:	output gap \| liquidity \| state space models

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Extent:	application/pdf
Series:	IWH Discussion Papers.
Type of publication:	Book / Working Paper
Language:	English
Notes:	Number 9
Classification:	E3 - Prices, Business Fluctuations, and Cycles ; E4 - Money and Interest Rates
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10008620285