Inside the "Upside Down": Estimating Ireland's Output Gap
Abstract
This paper attempts to identify estimates of Ireland’s output gap that are relevant for fiscal policy. In contrast to standard approaches, we focus on measures of domestic economic activity, given its relatively more... [ view full abstract ]
This paper attempts to identify estimates of Ireland’s output gap that are relevant for fiscal policy. In contrast to standard approaches, we focus on measures of domestic economic activity, given its relatively more tax-rich nature. We examine and test various methods based on univariate/ multivariate filters and principal components analysis, comparing our estimates with those of the EU commonly agreed methodology. We find that our results are stable; are less complex in structure; are able to explain price and wage inflation; and – most importantly – yield estimates that are more plausible for Ireland.
Authors
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Eddie Casey
(Irish Fiscal Advisory Council and UCD)
Topic Areas
Macroeconomics , Public Economics
Session
4A » Macroeconomics of the Irish Economy (15:30 - Thursday, 10th May, Lee Room)
Paper
Casey_E._2018._Estimating_Irelands_Output_Gap_IEA.pdf