System Estimates of Potential Output and the NAIRU

Posted: 16 Sep 1999

See all articles by Mikael Apel

Mikael Apel

Sveriges Riksbank - Monetary Policy Department

Per Jansson

Ministry of Finance (Sweden)

Abstract

This paper proposes a new approach for estimating potential output and the NAIRU. The methodology models these key unobservable economic variables as latent stochastic trends within a trivariate system of observables comprising information on unemployment, GDP, and inflation. Identification is achieved through the use of a standard version of Okun's law and a Phillips curve. The performance of the procedure is investigated using Swedish quarterly data covering the time period 1970:1-1996:3.

JEL Classification: C32, E32

Suggested Citation

Apel, Mikael and Jansson, Per, System Estimates of Potential Output and the NAIRU. Available at SSRN: https://ssrn.com/abstract=179534

Mikael Apel (Contact Author)

Sveriges Riksbank - Monetary Policy Department ( email )

S-103 37 Stockholm
Sweden

Per Jansson

Ministry of Finance (Sweden) ( email )

Drottningatan 21
Stockholm 10333, 103 33
Sweden

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