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Dismiss the gap? : a real-time assessment of the usefulness of Canadian output gaps in forecasting inflation / by Lise Pichette … [et al.].FB3-5/2018-10E-PDF

“The link between inflation and the output gap is key to the conduct of monetary policy in many central banks. However, the output gap is unobservable and highly uncertain. This paper examines whether output gaps, measured in real time, help improve forecasts of inflation when compared with simple models including only lags of inflation. Our paper makes three key contributions: it uses a novel database that enables the construction of real-time output gap estimates based on various models, including models incorporating a large number of variables as inputs; it assesses the ability of different measures of output gap and labour gap, as well as combinations of output gaps, to improve forecasts of inflation; and it is the first paper using real-time data to analyze the usefulness of output gaps to forecast Canada’s new core CPI measures"--Non-technical summary, p. 2.

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Publication information
Department/Agency
  • Bank of Canada.
TitleDismiss the gap? : a real-time assessment of the usefulness of Canadian output gaps in forecasting inflation / by Lise Pichette … [et al.].
Variant title
  • Real-time assessment of the usefulness of Canadian output gaps in forecasting inflation
Series title
  • Bank of Canada staff working paper, 1701-9397 ; 2018-10
Publication typeMonograph - View Master Record
Language[English]
FormatDigital text
Electronic document
Note(s)
  • "March 2018."
  • Includes bibliographical references (p. 24-26).
  • Includes abstract in French.
Publishing information
  • [Ottawa] : Bank of Canada, 2018.
Author / Contributor
  • Pichette, Lise.
Descriptionii, 37 p. : col. charts.
Catalogue number
  • FB3-5/2018-10E-PDF
Subject terms
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