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How large is the output gap in the euro area

Author

Listed:
  • Jarociński, Marek
  • Lenza, Michele

Abstract

The estimates of the output gap depend on the features of the models used to derive them. We discriminate among different estimates on the basis of their ability to forecast inflation. Our analysis suggests that output in the euro area was 6% lower than potential in 2014 and 2015, which is substantially below institutional estimates. JEL Classification: C32, C53, E31, E32, E37

Suggested Citation

  • Jarociński, Marek & Lenza, Michele, 2016. "How large is the output gap in the euro area," Research Bulletin, European Central Bank, vol. 24.
    • Handle: RePEc:ecb:ecbrbu:2016:0024:
    Note: 400529
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    Citations

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    Cited by:

    1. Werner Roeger & Kieran Mc Morrow & Atanas Hristov & Valerie Vandermeulen, 2019. "Output Gaps and Cyclical Indicator," European Economy - Discussion Papers 104, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    2. Sascha Buetzer, 2022. "Advancing the Monetary Policy Toolkit through Outright Transfers," IMF Working Papers 2022/087, International Monetary Fund.

    More about this item

    Keywords

    factor model; inflation forecast; output gap; phillips curve;
    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
    • C53 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Forecasting and Prediction Models; Simulation Methods
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E37 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Forecasting and Simulation: Models and Applications

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