Measuring output gap using New Keynesian model: application to the Czech economy

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Authors	HLOUŠEK Miroslav
Year of publication	2010
Type	Article in Proceedings
Conference	Mathematical Methods in Economics 2010
MU Faculty or unit	Faculty of Economics and Administration
Citation
Web	http://www.econ.muni.cz/~hlousek/papers/gap.pdf
Field	Economy
Keywords	output gap; New Keynesian model; unemployment
Description	This paper deals with estimation of output gap in the Czech economy using New Keynesian model. Data for unemployment and labor share together with calibrated values of structural parameters are used. The output gap is then compared to traditional measure -- detrended GDP. The main difference is that New Keynesian output gap is negative in the whole analyzed period which means that economy is operating under potential. Sensitivity analysis with respect to structural parameters is carried out and some implications for welfare are discussed.
Related projects:	Research Centre for the Competitiveness of the Czech Economy