Implications of Output Gap Uncertainty in Times of Crisis:
This paper analyses the monetary and fiscal policy implications of output gap estimates in times of crisis. The widening of output gaps observed in major OECD economies in the wake of the recent crisis has been mainly due to total factor productivity gaps, except in the United States where it essent...
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Format: | Elektronisch E-Book |
Sprache: | English |
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Paris
OECD Publishing
2012
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Schriftenreihe: | OECD Economics Department Working Papers
no.977 |
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Online-Zugang: | Volltext |
Zusammenfassung: | This paper analyses the monetary and fiscal policy implications of output gap estimates in times of crisis. The widening of output gaps observed in major OECD economies in the wake of the recent crisis has been mainly due to total factor productivity gaps, except in the United States where it essentially resulted from a large increase in the unemployment gap. As indicated by "positive" Taylor rules, output gaps influence policy-controlled interest rates and are in principle important indicators to guide monetary policy decisions. However, these gaps are estimated with a large margin of uncertainty, especially when composed mainly of TFP gaps. Given the high uncertainty of output gap estimates at present, monetary policy should put more weight on alternative indicators of inflation pressure such as wage settlements, trends in unit labour costs and a wide range of indicators of inflation expectations. The recent fall in margins observed in some countries may, for instance, translate into a combination of wage moderation and upward price pressure as firms try to rebuild their margins. In the United States, the large unemployment gap could also keep wage inflation under pressure despite a flattening Phillips curve. These downward pressures should not, however, trigger a deflationary spiral as long as inflation expectations stay anchored. As regards fiscal policy, output gaps remain necessary inputs to assess the fiscal stance adjusted for the cycle, such measures of underlying fiscal balances being reasonably robust to output gap uncertainty. |
Beschreibung: | 1 Online-Ressource (84 p.) 21 x 29.7cm. |
DOI: | 10.1787/5k95xd7m3szw-en |
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spelling | Bouis, Romain VerfasserIn aut Implications of Output Gap Uncertainty in Times of Crisis Romain, Bouis, Boris, Cournède and Ane Kathrine, Christensen = Implications de l'incertitude des écarts de production en temps de crise / Romain, Bouis, Boris, Cournède et Ane Kathrine, Christensen Implications de l'incertitude des écarts de production en temps de crise Paris OECD Publishing 2012 1 Online-Ressource (84 p.) 21 x 29.7cm. Text txt rdacontent Computermedien c rdamedia Online-Ressource cr rdacarrier OECD Economics Department Working Papers no.977 This paper analyses the monetary and fiscal policy implications of output gap estimates in times of crisis. The widening of output gaps observed in major OECD economies in the wake of the recent crisis has been mainly due to total factor productivity gaps, except in the United States where it essentially resulted from a large increase in the unemployment gap. As indicated by "positive" Taylor rules, output gaps influence policy-controlled interest rates and are in principle important indicators to guide monetary policy decisions. However, these gaps are estimated with a large margin of uncertainty, especially when composed mainly of TFP gaps. Given the high uncertainty of output gap estimates at present, monetary policy should put more weight on alternative indicators of inflation pressure such as wage settlements, trends in unit labour costs and a wide range of indicators of inflation expectations. The recent fall in margins observed in some countries may, for instance, translate into a combination of wage moderation and upward price pressure as firms try to rebuild their margins. In the United States, the large unemployment gap could also keep wage inflation under pressure despite a flattening Phillips curve. These downward pressures should not, however, trigger a deflationary spiral as long as inflation expectations stay anchored. As regards fiscal policy, output gaps remain necessary inputs to assess the fiscal stance adjusted for the cycle, such measures of underlying fiscal balances being reasonably robust to output gap uncertainty. Economics Cournède, Boris MitwirkendeR ctb Christensen, Ane Kathrine MitwirkendeR ctb FWS01 ZDB-13-SOC FWS_PDA_SOC https://doi.org/10.1787/5k95xd7m3szw-en Volltext |
spellingShingle | Bouis, Romain Implications of Output Gap Uncertainty in Times of Crisis Economics |
title | Implications of Output Gap Uncertainty in Times of Crisis |
title_alt | Implications de l'incertitude des écarts de production en temps de crise |
title_auth | Implications of Output Gap Uncertainty in Times of Crisis |
title_exact_search | Implications of Output Gap Uncertainty in Times of Crisis |
title_full | Implications of Output Gap Uncertainty in Times of Crisis Romain, Bouis, Boris, Cournède and Ane Kathrine, Christensen = Implications de l'incertitude des écarts de production en temps de crise / Romain, Bouis, Boris, Cournède et Ane Kathrine, Christensen |
title_fullStr | Implications of Output Gap Uncertainty in Times of Crisis Romain, Bouis, Boris, Cournède and Ane Kathrine, Christensen = Implications de l'incertitude des écarts de production en temps de crise / Romain, Bouis, Boris, Cournède et Ane Kathrine, Christensen |
title_full_unstemmed | Implications of Output Gap Uncertainty in Times of Crisis Romain, Bouis, Boris, Cournède and Ane Kathrine, Christensen = Implications de l'incertitude des écarts de production en temps de crise / Romain, Bouis, Boris, Cournède et Ane Kathrine, Christensen |
title_short | Implications of Output Gap Uncertainty in Times of Crisis |
title_sort | implications of output gap uncertainty in times of crisis |
topic | Economics |
topic_facet | Economics |
url | https://doi.org/10.1787/5k95xd7m3szw-en |
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