Albu, Lucian-Liviu (2006): A dynamic model to estimate the long-run trends in potential GDP.
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To estimate long-run growth based on the so-called potential GDP became a constant preoccupation among economists. However, one remaining problem in every long-run growth model is to estimate a persistent trend in labour productivity outside of it, in order to avoid the implicit circular relationship between actual productivity growth and potential level of production. Coming from recent literature on natural rate of unemployment estimation we used a specific methodology in order to estimate NAIRU in case of post-communist economies and based on it to evaluate the potential GDP. Taking into account that the “classic” Hodrick-Prescott method is in fact equivalent to an interpolation procedure, we used in our experiment other three filters demonstrating very similar output. Moreover, we conceived a simple autonomous model in order to estimate the growth of a so-called “pure” productivity independently from the actual level of employment and to compare its dynamics with that of natural rate of unemployment.
|Item Type:||MPRA Paper|
|Institution:||Institute for Economic Forecasting, Bucharest|
|Original Title:||A dynamic model to estimate the long-run trends in potential GDP|
|Keywords:||natural rate of unemployment; potential GDP; pure productivity|
|Subjects:||P - Economic Systems > P2 - Socialist Systems and Transitional Economies > P24 - National Income, Product, and Expenditure; Money; Inflation
C - Mathematical and Quantitative Methods > C1 - Econometric and Statistical Methods and Methodology: General > C13 - Estimation: General
E - Macroeconomics and Monetary Economics > E2 - Macroeconomics: Consumption, Saving, Production, Employment, and Investment > E24 - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital
D - Microeconomics > D5 - General Equilibrium and Disequilibrium > D58 - Computable and Other Applied General Equilibrium Models
|Depositing User:||Lucian Liviu Albu|
|Date Deposited:||26. Jun 2007|
|Last Modified:||14. Feb 2013 02:25|
Albu, L.-L. (1997): Strain and inflation-unemployment relationship in transitional economies: a theoretical and empirical investigation, University of Leicester, Department of Economics, Centre for Economic Studies, Leicester, ACE-PHARE, December. Albu, L.-L. (2001): “Evolution of Inflation-Unemployment Relationship in the Perspective of Romania’s Accession to EU”, Romanian Journal of Economic Forecasting, 3-4, Bucharest, pp. 5-23. Albu, L.-L. (2005): “Estimating natural unemployment in transitional economies (Case of Romania)”, in Adapted models to estimate potential GDP in the candidate countries, GDN research project, Prague, June. Ball, L. and Mankiw, G. (2002): “The NAIRU in Theory and Practice”, NBER Working Paper Series, 8940, National Bureau of Economic Research, Cambridge. Ball, L. and Moffitt, R. (2001): “Productivity Growth and the Phillips Curve”, in A. B. Krueger and R. Solow (eds.) The Roaring Nineties: Can Full Employment Be Sustained?, New York: The Russell Sage Foundation and The Century Foundation Press. Daianu, D. and Albu, L.-L. (1996): Strain and the Inflation-Unemployment Relationship: A Conceptual and Empirical Investigation. Econometric Inference into the Macroeconomic Dynamics East European Economies, University of Leicester, UK. Research Memorandum, No. 96/15. Hodrick, R. and Prescott, E. (1997): “Postwar U.S. Business Cycles: An Empirical Investigation”, Journal of Money, Credit, and Banking, 29, pp. 1-16. Staiger, D., Stock, J.H., and Watson, M.W. (2001): “Prices, Wages, and the U.S. NAIRU in the 1990s”, in A. B. Krueger and R. Solow (eds.) The Roaring Nineties: Can Full Employment Be Sustained?, New York: The Russell Sage Foundation and The Century Foundation Press.