An unobserved components model for Finland : Estimates of potential output and NAWRU

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dc.contributor Bank of Finland
dc.contributor Suomen Pankki
dc.contributor.author Sariola, Mikko
dc.date.accessioned 2019-04-04T09:46:24Z
dc.date.available 2019-04-04T09:46:24Z
dc.date.issued 2019
dc.identifier.uri https://helda.helsinki.fi/bof/handle/123456789/16089
dc.description.abstract In this paper, we estimate a potential output model for Finland using an unobserved component model. The model builds on a production function approach, and features price and wage Phillips curves, Okun’s law and several resource-utilization indicators. We show that incorporating resource-utilization indicators, i.e. capacity utilization and long-term unemployment, improves real-time reliability of the output gap and NAWRU estimates. Our real-time estimate of the output gap is robust even in an event of a sudden turning point in the economy such as the global financial crisis. It also outperforms the HP filter estimate. Results suggest that Finland’s potential output growth slowed significantly in the aftermath of the financial crisis and that the output gap was negative for most of the subsequent decade. The slowdown in potential growth was due mainly to lackluster total factor productivity growth. The real-time results are broadly in line with the ex-post estimates of the IMF and the European Commission.
dc.format.extent 39
dc.language.iso ENG
dc.rights https://helda.helsinki.fi/bof/copyright
dc.subject Suomi
dc.subject potentiaalinen tuotanto
dc.subject mallit
dc.subject tuotantokuilu
dc.title An unobserved components model for Finland : Estimates of potential output and NAWRU
dc.type Paper
dc.identifier.urn URN:NBN:fi:bof-201904041133
dc.subject.jel C51
dc.subject.jel E23
dc.subject.jel E32
dc.series.name BoF Economics Review
dc.series.year 2019
dc.series.number 2/2019
dc.series.sortingnumber 0002
dc.date.publication 4.4.2019
dc.subject.yso tuotanto
dc.subject.yso talouskasvu
bof-internal.includedInCRIS 1
dc.type.okm D4

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