The gap between potential and actual output—the output gap—is a key variable for policymaking. This paper adapts the methodology developed in Blagrave and others (2015) to estimate the path of output gap in the U.S. economy. The results show that the output gap has considerably shrunk since...

This paper extends the multivariate filter approach of estimating potential output developed by Alichi and others (2018) to incorporate labor market hysteresis. This extension captures the idea that long and deep recessions (expansions) cause persistent damage (improvement) to the labor market,...

The paper uses a combination of micro-level datasets to document the rise of income polarization-what some have referred to as the 'hollowing out' of the income distribution-in the United States, since the 1970s. While in the initial decades more middle-income households moved up, rather than...

Data show that middle-income households have continued moving down, and less so up, the income distribution in the United States since the 1970s-a phenomenon that is often referred to as the polarization or 'hollowing out' of the income distribution. While the level of income polarization is...

Estimates of potential output and the neutral short-term interest rate play important roles in policy making. However, such estimates are associated with significant uncertainty and subject to significant revisions. This paper extends the structural multivariate filter methodology by adding a...

Estimates of potential output are an important component of a structured forecasting and policy analysis system. Using information on capacity utilization, this paper extends the multivariate filter developed by Laxton and Tetlow (1992) and modified by Benes and others (2010), Blagrave and...