TY  - UNPD
A1  - Wolters, Maik Hendrik
T1  - How the baby boomers' retirement wave distorts model-based output gap estimates
T2  - Working paper series / Institute for Monetary and Financial Stability ; 121
N2  - The paper illustrates based on an example the importance of consistency between the empirical measurement and the concept of variables in estimated macroeconomic models. Since standard New Keynesian models do not account for demographic trends and sectoral shifts, the authors proposes adjusting hours worked per capita used to estimate such models accordingly to enhance the consistency between the data and the model. Without this adjustment, low frequency shifts in hours lead to unreasonable trends in the output gap, caused by the close link between hours and the output gap in such models.
The retirement wave of baby boomers, for example, lowers U.S. aggregate hours per capita, which leads to erroneous permanently negative output gap estimates following the Great Recession. After correcting hours for changes in the age composition, the estimated output gap closes gradually instead following the years after the Great Recession.
T3  - Working paper series / Institute for Monetary and Financial Stability - 121 
KW  - low frequency trends
KW  - demographic trends
KW  - hours per capita measurement
KW  - output gap estimates
KW  - DSGE models
KW  - Bayesian estimation
Y1  - 2018
UR  - http://publikationen.ub.uni-frankfurt.de/frontdoor/index/index/docId/47595
UR  - https://nbn-resolving.org/urn:nbn:de:hebis:30:3-475955
UR  - https://www.imfs-frankfurt.de/de/forschung/imfs-working-papers/
PB  - Johann Wolfgang Goethe-Univ., Inst. for Monetary and Financial Stability
CY  - Frankfurt am Main
ER  -