Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/209865
Authors: 
Bjørnland, Hilde C.
Brubakk, Leif
Jore, Anne Sofie
Year of Publication: 
2006
Series/Report no.: 
Working Paper No. 2006/2
Abstract: 
The output gap is a crucial concept in the monetary policy framework, indicating demand pressure that generates inflation. However, its definition and estimation raise a number of theoretical and empirical questions. This paper evaluates a series of univariate and multivariate methods for extracting the output gap in Norway, and compares their value added in predicting inflation. We find that models including the output gap have better predictive power than models based on alternative indicators, and they forecast significantly better than simple benchmark models. At the longer forecast horizons, multivariate measures of the output gap perform better than the univariate gaps.
Subjects: 
Phillips curve
output gap
forecast
forecast combination
JEL: 
C32
E31
E32
E37
Persistent Identifier of the first edition: 
ISBN: 
82-7553-347-3
Creative Commons License: 
https://creativecommons.org/licenses/by-nc-nd/4.0/deed.no
Document Type: 
Working Paper
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