In this paper, an Unobserved Components Model is employed to decompose German real GDP into the trend, cycle and seasonal components and the working day effect. The most important findings are: 1) The growth rate of potential output declined from 4.2 per cent in the sixties to 1.4 per cent at the end of the nineties of the last century. 2) The business cycle is comprised of two subcycles with a period of about four and eight years, respectively. 3) The seasonal pattern is not constant over time and the number of working days contribute significantly to the short-term variability of output.
trend cycle season working day effect output gap unobserved components models