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Output Gaps in European Monetary Union. New Insights from Input Augmentation in the Technological Progress

Author

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  • Dimitz, Maria Antoinette

    (Dimitz; Foreign Research Division, Oesterreichische Nationalbank)

Abstract

Output gaps for ten European countries and the USA are estimated based on a CES production function with input augmentation in the technological progress. The substitution parameter is estimated from the coefficients of the labor and capital demand functions. The estimation is done using Johansen's cointegration method. For six of the eleven countries analyzed, the use of the Cobb Douglas form would not be appropriate. The output gaps show a similar cyclical pattern for all countries. They remain mostly within +/-3% for five countries and within +/-5% for another four. Separating labor- and capital-augmenting technological progress gives insight into the driving forces of growth.

Suggested Citation

  • Dimitz, Maria Antoinette, 2001. "Output Gaps in European Monetary Union. New Insights from Input Augmentation in the Technological Progress," Economics Series 102, Institute for Advanced Studies.
    • Handle: RePEc:ihs:ihsesp:102
    as

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    File URL: https://irihs.ihs.ac.at/id/eprint/1362
    File Function: First version, 2001
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    References listed on IDEAS

    as
    1. Blanchard, Olivier Jean & Quah, Danny, 1989. "The Dynamic Effects of Aggregate Demand and Supply Disturbances," American Economic Review, American Economic Association, vol. 79(4), pages 655-673, September.
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    3. Duffy, John & Papageorgiou, Chris, 2000. "A Cross-Country Empirical Investigation of the Aggregate Production Function Specification," Journal of Economic Growth, Springer, vol. 5(1), pages 87-120, March.
    4. Mikael Apel & Per Jansson, 1999. "System estimates of potential output and the NAIRU," Empirical Economics, Springer, vol. 24(3), pages 373-388.
    5. Jørgen Elmeskov, 1993. "High and Persistent Unemployment: Assessment of the Problem and Its Causes," OECD Economics Department Working Papers 132, OECD Publishing.
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    Cited by:

    1. Álvarez, Luis J. & Gómez-Loscos, Ana, 2018. "A menu on output gap estimation methods," Journal of Policy Modeling, Elsevier, vol. 40(4), pages 827-850.

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    More about this item

    Keywords

    Output gap; Potential output; CES production function; EMU;
    All these keywords.

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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