Dovern, Jonas
Preview |
PDF, English
Download (749kB) | Terms of use |
Citation of documents: Please do not cite the URL that is displayed in your browser location input, instead use the DOI, URN or the persistent URL below, as we can guarantee their long-time accessibility.
Abstract
This paper analyzes how the OECD revises potential output (PO) estimates after recessions. We show that downward revisions are substantial and mostly driven by supply shocks while PO estimates do not significantly react to demand shocks. In addition, revisions are partly caused by avoidable mismeasurement of PO before recessions. In particular, we show that the length of the preceding boom and pre-recession values of the current account balance and credit volumes are predictors of post-recession PO revisions. Our results call for improved methods for estimating PO and provide evidence against the existence of substantial hysteresis effects of demand shocks.
| Document type: | Working paper |
|---|---|
| Series Name: | Discussion Paper Series |
| Volume: | 0639 |
| Publisher: | University of Heidelberg |
| Place of Publication: | Heidelberg |
| Date Deposited: | 10 Nov 2017 13:35 |
| Date: | 8 November 2017 |
| Faculties / Institutes: | The Faculty of Economics and Social Studies > Alfred-Weber-Institut for Economics |
| DDC-classification: | 330 Economics |
| Controlled Keywords: | potential output, trend, output gap, hysteresis, OECD |
| Series: | Discussion Paper Series / University of Heidelberg, Department of Economics |
