Prague Economic Papers 2009, 18(4):366-379 | DOI: 10.18267/j.pep.360

An Estimation of Output Gap in Romanian Economy Using the DSGE Approach

Petre Caraiani
Researcher at the Institute for Economic Forecasting, Romanian Academy, Bucharest (caraiani@ipe.ro).

In this paper I use an open economy DSGE model and estimate it for Romanian economy using Bayesian techniques. Based on estimation I derive a smoothed estimation of the output gap. I compare the results with those from standard procedures to estimate the output gap, the Hodrick Prescott ilter, the production function and an unobserved components model. The results show that the DSGE approach can give a better picture of the output gap and it is more consistent with the dynamics of Romanian economy.

Keywords: monetary policy, output gap, DSGE models, Bayesian techniques
JEL classification: C51, E32, E52

Published: January 1, 2009  Show citation

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Caraiani, P. (2009). An Estimation of Output Gap in Romanian Economy Using the DSGE Approach. Prague Economic Papers18(4), 366-379. doi: 10.18267/j.pep.360
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