Affiliation:
1. Universitá di Bologna matteo.barigozzi@unibo.it
2. Federal Reserve Board matteo.luciani@frb.gov
Abstract
Abstract
We propose a new measure of the output gap based on a dynamic factor model that is estimated on a large number of U.S. macroeconomic indicators and which incorporates relevant stylized facts about macroeconomic data (co-movements, non-stationarity, and the slow drift in long-run output growth over time). We find that, (1) from the mid-1990s to 2008, the U.S. economy operated above its potential; and, (2) in 2018:Q4, the labor market was tighter than the market for goods and services. Because it is mainly data-driven, our measure is a natural complementary tool to the theoretical models used at policy institutions.
Subject
Economics and Econometrics,Social Sciences (miscellaneous)
Cited by
5 articles.
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