This paper reviews a number of different methods that can be used to estimate potential output and the output gap. Measures of potential output and the output gap are useful to help identify the scope for sustainable noninflationary growth and to allow an assessment of the stance of...

This paper investigates whether Indonesia’s recent currency crisis was due to domestic fundamentals, common external shocks (“monsoons”), or contagion from neighboring countries. Markov-switching models attribute speculative pressure on Indonesia’s currency to domestic political and...

Statistics is commonly taught as a set of techniques to aid in decision making, by extracting information from data. It is argued here that the underlying purpose, often implicit rather than explicit, of every statistical analysis is to establish a set of probability models which can be used to...

Summary This paper considers popular methods for the quantification of survey expectations. We investigate the asymptotic properties of two variants of the probability approach originally suggested by Carlson and Parkin (1975). It is argued that the traditional method can be interpreted as an...

This paper considers popular methods for the quantification of survey expectations.We investigate the asymptotic properties of two variants of the probability approach originally suggested by Carlson and Parkin (1975). It is argued that the traditionalmethod can be interpreted as an instrumental...

Model or variable selection is usually achieved through ranking models according to the increasing order of preference. One of methods is applying Kullback–Leibler distance or relative entropy as a selection criterion. Yet that will raise two questions, why use this criterion and are there any...