Hindsight vs. Real time measurement of the output gap: Implications for the Phillips curve in the Chilean Case

Camila Figueroa, Jorge Fornero and Pablo Garcia Silva

Working Papers Central Bank of Chile from Central Bank of Chile

Abstract: We examine sources of output gap revisions in Chile and document how the informational content of these measures affects forecasts of inflation using estimated Phillips curves. Data and forecasts come from Monetary Policy Reports. Output gap revisions are found well behaved because cannot be predicted. We consider backward and forward-looking specifications and also real time, quasi-real time and final output gap estimates. Median and common-factor inflation present lower forecast errors. Results suggest that the passage of time is informative to measure output gap. Inflation forecasts more accurate are found using forward-looking specifications and CB of Chile Staff’s gap estimates.

Date: 2019-10
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Persistent link: https://EconPapers.repec.org/RePEc:chb:bcchwp:854

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