The output gap, while inherently unobservable, plays a pivotal role in informing policymakers due to its significant implications for forecasting inflation rates and understanding the mechanisms of monetary policy transmission. Traditional filters frequently employed in estimating the output gap...

The paper uses capital and labor utilization rates to derive estimates of the Japanese output gap and potential output. Two techniques are used. The first uses the cyclical indicators to adjust potential output estimates derived from a Hodrick- Prescott filter over the most recent period when...

Potential output estimates during Ireland's pre-2007 housing boom showed narrowing output gaps and positive structural budget balances. These results helped to create a false sense of security among domestic policy makers. It took a deep economic and financial crisis to learn that Ireland had...