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Selected Category- Output Gaps

GMV: How Big is the “Missing Inflation” Puzzle in the US

Core PCE inflation fell back to 1.3 percent quarter-on-quarter in Q4 2019, ... reigniting the debate around “missing inflation” and what...

GMV: The Engine Room of our Inflation-Consistent NAIRUs

Consensus NAIRU estimates put the Euro periphery near full employment, ... even though the pace of underlying inflation has been subdued for many ye...

GMV: Inflation-consistent NAIRUs for Italy and Spain

Consensus NAIRU estimates put Italy and Spain close to full employment, ... even though the pace of underlying inflation has been subdued for many y...

GMV: Reverse-Engineering the Euro Zone NAIRU

In last week’s Global Macro Views we flagged rising Euro zone deflation risk, ... because the weaker German outlook risks upsetting a delicate...

Global Macro Views: Rising Deflation Risk in the Euro Zone

The annual meetings were full of anecdotes on the severity of the German downturn. The diesel shock and new environmental standards weigh heavily on...

Global Macro Views: The Growing Debate over Output Gaps

We started the Campaign against Nonsense Output Gaps (CANOO) earlier this year, ... arguing that consensus estimates for Euro periphery output gaps ...

Global Macro Views: Nonsense Output Gaps and Labor Markets

A common opposing view to our nonsense output gap series is that employment has almost fully recovered, so how can a substantial amount of labor market slack remain? Rising labor participation among women flatters the picture, which we filter out by looking at prime-age male employment. Our work points to still significant slack in Spain, Italy and Greece.

Global Macro Views: Nonsense Output Gaps and Current Account Positions

Euro periphery current account balances have almost all swung into surplus, which is often cited as positive evidence that competitiveness has been restored. But the swing to current account surplus has a big cyclical component due to still large output gaps in some cases. Adjusted for slack, Euro periphery current accounts are mostly still in deficit.

Global Macro Views: Nonsense Output Gaps and the Phillips Curve

Phillips curves provide a useful lens through which to look at output gaps, since they link the degree of economic slack to the pace of underlying inflation. Estimates for structural unemployment in the Euro periphery look too high given how low inflation historically, which supports our earlier analysis that Euro periphery output gaps remain large.

Global Macro Views: Nonsense Output Gaps

We test whether Euro periphery output gaps are too narrow given weak or negative growth. If we allow for sizable 2008 GDP drops and slower trend growth since, we estimate periphery output gaps that are often twice as large as consensus numbers.




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