Estimating potential output for New Zealand
One of the main indicators of inflationary pressures used by the Reserve Bank of New Zealand is the output gap. An alternative to the Reserve Bank's incumbent measure of potential output is obtained using a structural vector autoregression (SVAR) methodology with long-run restrictions. The Reserve Bank's official measure of the output gap and the estimate obtained from the SVAR model tend to agree about the state of the cycle, especially during the 1970s and 1990s. However, during the 1980s, the period of economic reforms, they are more dissimilar.
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Document Type: Research Article
Affiliations: Victoria University of Wellington, PO Box 600, Wellington, New Zealand
Publication date: 2003-05-01