Template-Type: ReDIF-Paper 1.0
Author-Name: Emanuel Kohlscheen
Author-X-Name-First: Emanual
Author-X-Name-Last: Kolscheen
Author-Name: Jouchi Nakajima
Author-X-Name-First: Jouchi
Author-X-Name-Last: Nakajima
Title: Steady-state growth
Abstract: We compute steady-state economic growth - defined as the rate of growth that the economy would converge to in the absence of new shocks. This rate can be computed in real-time by means of a parsimonious time-varying parameter (TVP) VAR model. Our procedure offers a relatively agnostic estimation of benchmark equilibrium growth rates. Estimates show that the steady-state GDP growth rate in the case of the United States declined from just above 3% per year in the 1990s to 2.4% at present. Results for other six advanced economies and the euro area indicate that the steady-state growth rate, which is consistent with stable inflation and financial conditions, has been relatively stable since 2010 in most cases in spite of a recent slowdown in actual GDP growth rates.
Length: 20 pages
Creation-Date: 2019-09
File-URL: https://www.bis.org/publ/work812.pdf
File-Format: Application/pdf
File-Function: Full PDF document
File-URL: https://www.bis.org/publ/work812.htm
File-Format: text/html
Number: 812
Classification-JEL: C11, C15, E30, O40
Keywords: economic growth, financial conditions, inflation, monetary policy, potential output, time-varying
Handle: RePEc:bis:biswps:812