Output Gaps, Inflation and Financial Cycles in the United Kingdom

Does the Phillips curve help to forecast euro area inflation?

“…The measure considered here follows the methodology proposed in Melolinna and Tóth (2018), which is very similar to Borio et al (2015), but instead of considering only real credit growth and residential property price indices, a financial conditions index is used, comprising: the real growth rate of credit to households, real growth rate of credit to non-financial corporations (NFCs), real growth rate of a broad monetary aggregate (M3), real growth rate of residential property prices and the spread between short-and long-term risk free interest rate.…”

Türki̇ye’de İşsi̇zli̇ği̇n Ne Kadari Yapisal? Gözlemlenemeyen Bi̇leşenler Yaklaşimi

“…By using this filter, the logarithmic likelihood function of the state-space model can be estimated and, thus, parameters of the model are easily estimated through maximum likelihood methods. On the other hand, the extension of the model with exogenous variables and exogenous shocks should be stated as another advantage of Kalman filtering (Darvas-Simon, 2015;Borio et al 2014;Melolinna -Toth, 2016). For example, Alichi ( 2015) Unlike previous studies, our study estimates the structural unemployment rate over a more extended period and obtains the Beveridge curve for different sub-periods.…”

“…For instance, it is claimed that long-lasting cyclical unemployment creates a hysteresis effect, and this contributes to an increase in structural unemployment (Blanchard, 2018). A prolonged period of unemployment makes workers' abilities out of date and reduces their attractiveness for employers; therefore, it may cause a depreciation in human capital by decreasing the bargaining power of the workers (Melolinna -Toth, 2016). In short, it is possible to say that cyclical unemployment may turn into structural unemployment after a while.…”