Status: Draft -- Not PublishedWill be live at 02/11/2021 07:35
Global Macro Views: Full Employment Output Gaps
- The US is debating whether a $1.9 tn fiscal stimulus will lead to overheating, …
- a discussion that hinges critically on just how much slack there is in the economy.
- Output gaps are very difficult to measure, as we have argued on previous occasions.
- But employment data are easy to come by and put output gap estimates in perspective.
- We document fall-out from COVID-19 on prime-age employment across key economies.
- The decline in US prime-age employment validates the CBO output gap of -4.4 percent.
- Depressed employment in Europe even before COVID-19 points to large output gaps.