Empirical Economics

, Volume 24, Issue 3, pp 373–388 | Cite as

System estimates of potential output and the NAIRU

  • Mikael Apel
  • Per Jansson

Abstract.

This paper proposes a new approach for estimating potential output and the NAIRU. The methodology models these key unobservable economic variables as latent stochastic trends within a trivariate system of observables comprising information on unemployment, GDP, and inflation. Identification is achieved through the use of a standard version of Okun's law and a Phillips curve. The performance of the procedure is investigated using Swedish quarterly data covering the time period 1970:1–1996:3.

Key words: Kalman filter NAIRU Okun's law Phillips curve potential output structural time-series models unobserved-components models 
JEL classification: C32 E32 

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Copyright information

© Springer-Verlag Berlin Heidelberg 1999

Authors and Affiliations

  • Mikael Apel
    • 1
  • Per Jansson
    • 1
  1. 1.Economics Department, Sveriges Riksbank, S-103 37 Stockholm, Sweden (e-mail: mikael.apel@riksbank.se; per. jansson@riksbank.se)SE

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