Output gap
Phillips curve flatter when inflation is low – researchers
Downward wage and price rigidities cause non-linearity in Phillips curve, says Peterson Institute paper
Fed set to adopt ‘elements’ of price-level targeting
Covid-19 could act as a catalyst for a Janet Yellen-supported Fed move to adopt elements of price-level targeting. But questions remain about the timing of such a move
Strict lockdown could cause 37% quarterly GDP contraction – RBNZ
Assessment shows impact of containment measures on New Zealand’s economic output
Tackling ‘dead-end’ monetary policy
A shift to lower inflation targets would help central banks escape forever-loose monetary policy, writes former IMF chief Jacques de Larosière
Cleveland Fed paper looks for reasons for flatter Phillips curve
Monetary policy responses to “output deviations” may be key factor, researcher argues
Loose financial conditions predict output gap – NY Fed paper
Policy-makers can make significant welfare gains by greater focus on financial conditions – researchers
Open and closed economy central banks react differently to inflation – research
Some economies respond more strongly to certain variables, Fernando Leibovici says
Minneapolis Fed president calls on Fed to ‘re-tool’ labour market analysis
Wages are a better means of estimating labour market slack, Kashkari says
San Francisco Fed researcher seeks to improve Phillips curve
Introducing an “interaction variable” can increase predictive performance, researcher says
Globalisation is helping to flatten Phillips curve – Fed paper
Price sensitivity to output changes is significantly weaker in high trade-intensive industries
Dallas Fed paper analyses monetary policy rules
Results are in “stark contrast” to previous research, authors say
Global output gap matters for inflation – BIS paper
Authors find domestic and global output gaps both important, but effects differ across economies
Fed adviser sets out new equilibrium rate model
Long-term interest rates are more important for spending decisions, author claims
Malaysia central bank dismisses concerns over government cash handout
BNM says cash handout idea was “first mooted” by its board, dismissing the suggestion it was designed to “tempt” the Malaysian people
Google’s Hal Varian on how technology is changing economics
Google’s chief economist talks to Christopher Jeffery about how big data and machine learning are facilitating changes in economic thinking; discusses the impact technical breakthroughs may have for central banks
BoE’s new MPC members disagree on future path of hikes
New deputy Dave Ramsden sees current degree of slack to be too great to warrant removal of stimulus, while Tenreyro believes it cannot “persist for too long”
RBNZ paper develops ‘intuitive and reliable’ output gap measure
Authors turn to a “Beveridge-Nelson filter” to produce an output gap estimate that performs better than those produced by other filtering techniques
Thai governor calls for rethink of monetary policy frameworks
New structure should systematically acknowledge the negative impact of monetary policy; Santiprabhob recognises macroprudential cannot take all the strain
Output gap in euro area is much larger than official estimates – paper
Official estimates predict output gap 3–4% less negative than author’s results; current models do not “adequately capture” inflation developments
New model shows eurozone output gap remains large, researchers argue
Other models fail to capture interplay of inflation and output, paper says
LatAm policy-makers were possibly ‘excessively optimistic’ over economic potential, BIS paper says
Downplaying commodity super-cycle may have led to incorrect assessment of economic potential in Latin America, paper says; may have skewed monetary and fiscal policies
Norges Bank paper offers insights on when to ‘lean against the wind’
Norges Bank working paper investigates the extent monetary policies should actively aim at mitigating the build-up of financial imbalances; using rates to curb credit growth could lower output
IMF paper proposes refinements to potential output estimation
Researchers use an adapted ‘multivariate filter’ that aims to improve upon other methods of estimating potential output, although they admit the result is probably only the ‘least worst’ option
IMF paper attempts to pin down output gap
Members of the Fund's European department build new models incorporating financial frictions to estimate the output gap in the US during the Great Moderation and beyond