TY - BOOK ID - 84783190 TI - Steady as She Goes—Estimating Potential Output During Financial “Booms and Busts” AU - Berger, Helge. AU - Dowling, Thomas. AU - Lanau, Sergi. AU - Mrkaic, Mico. AU - Rabanal, Pau. AU - Taheri Sanjani, Marzie. PY - 2015 SN - 151353307X 1513599305 1513503073 PB - Washington, D.C. : International Monetary Fund, DB - UniCat KW - Money and Monetary Policy KW - Real Estate KW - Economic Theory KW - Production and Operations Management KW - Business Fluctuations KW - Cycles KW - Financial Markets and the Macroeconomy KW - Model Construction and Estimation KW - Estimation KW - Macroeconomics: Production KW - Housing Supply and Markets KW - Monetary Policy, Central Banking, and the Supply of Money and Credit: General KW - Financial Economics KW - Macroeconomics KW - Property & real estate KW - Monetary economics KW - Economic theory & philosophy KW - Output gap KW - Potential output KW - Housing prices KW - Credit KW - Financial frictions KW - Production KW - Prices KW - Money KW - Economic theory KW - Housing KW - Economic forecasting KW - Spain UR - https://www.unicat.be/uniCat?func=search&query=sysid:84783190 AB - Potential output—in the sense of the GDP level or path an economy can sustain over the medium term—is a crucial benchmark for policymakers. However, it is difficult to estimate when financial “booms and busts” are driving the real economy. This paper uses a simple multivariate filtering approach to illustrate the role financial variables play in driving potential or sustainable output. The results suggest that it moves more steadily during financial “boom and bust” periods than implied by conventional HP filter estimates, which tend to more closely follow actual GDP. A two-region, multisector New Keynesian DSGE model with financial frictions sheds light on the economic forces that could be behind the results obtained from the filter. This has important implications for policymakers. ER -