Measuring coherence of output gaps with an application to the Euro area

Research output: Contribution to journalArticleAcademicpeer-review

49 Citations (Scopus)

Abstract

If output gaps in a currency union are not sufficiently coherent, the common monetary policy will not be optimal for all countries or regions in the union. It is common practice to measure coherence of output gaps by a correlation coefficient. We propose new measures of output gap coherence, which take differences in the signs and/or amplitudes of the output gaps more adequately into account than the correlation coefficient. We apply these measures to the euro area, using the US as a benchmark. We also examine how sensitive our findings are to different ways of calculating the output gaps.

Original languageEnglish
Pages (from-to)217-236
Number of pages20
JournalOxford Economic Papers
Volume64
Issue number2
DOIs
Publication statusPublished - Apr-2012

Keywords

  • E32
  • F02
  • F42
  • BUSINESS-CYCLE SYNCHRONIZATION
  • STRUCTURAL-CHANGE
  • US
  • COMOVEMENT
  • TRADE
  • SPECIALIZATION
  • BOOTSTRAP
  • COUNTRIES
  • WORLD
  • TESTS

Cite this