Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/209886
Authors: 
Bjørnland, Hilde C.
Leitemo, Kai
Maih, Junior
Year of Publication: 
2007
Series/Report no.: 
Working Paper No. 2007/10
Abstract: 
The time-varying natural rate of interest and output and the implied medium term inflation target for the US economy are estimated over the period 1983-2005. The estimation is conducted within the New-Keynesian framework using Bayesian and Kalman-filter estimation techniques. With the model-consistent estimate of the output gap, we get a small weight on the backward-looking component of the New-Keynesian Phillips curve - similar to what is obtained in studies which use labor share of income as a driver for inflation (e.g., Galì et al., 2001, 2003). The turning points of the business cycle are nevertheless broadly consistent with those of CBO/NBER. We find considerable variation in the natural rate of interest while the inflation target has been close to 2% over the last decade.
Subjects: 
New-Keynesian model
natural rate of interest
natural rate of output
inflation target
JEL: 
C51
E32
E37
E52
Persistent Identifier of the first edition: 
ISBN: 
978-82-7553-408-6
Creative Commons License: 
https://creativecommons.org/licenses/by-nc-nd/4.0/deed.no
Document Type: 
Working Paper
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