Estimating the financial crisis’ impact on potential output

I use a multivariate Blanchard-Quah decomposition to investigate the financial crisis’ impact on potential output in the Euro area, the US, Japan, and the UK. I detect an impact for all countries, which is especially severe for the UK.     

Estimating potential output and the output gap for the euro area: a model-based production function approach

This paper provides an analysis of multivariate unobserved components models for the estimation of potential output and the output gap in the euro area. Bivariate models of output and inflation and multivariate model-based implementations of the production function approach are considered; according to the latter potential output is derived from the permanent components of the factors of production consistent with stable inflation, whereas the output gap results from the combination of the transitory components. This approach allows to measure the contribution of the various factors of production to potential output growth, and to assess the reliability of the output gap estimates. Various alternative statistical specifications for the separation of trend and cycle are considered entertaining different economic hypotheses. The paper also provides an assessment of the reliability of the alternative output gap estimates and analyses their predictive validity by means of a rolling forecast exercise that provides an evaluation of the capability to forecast future inflation. A preliminary version of this paper appeared as EUI working paper ECO2002/09 and was presented at the European Central Bank, the European University Institute, the Growth and Business Cycles in Theory and Practice conference, Manchester UK, 20–21 June 2002, the Common Features in Rio conference, Rio de Janeiro, 29–31 July 2002. We thank the participants, Michael Artis, Gerard Korteweg, Geoff Kenny, Neale Kennedy, Manuel da Mota Freitas Martins, Gerard Ruenstler, and three anonymous Referees for useful discussions and valuable comments. The paper was largely written while the first author was acting as consultant for the ECB. The views expressed in it do not necessarily reflect those of the ECB. All correspondence to Alberto Musso.     

Estimating the Cost of Children from New Zealand Quasi-unit Record Data of Household Consumption

This paper utilizes quasi-unit record data on expenditures and incomes of New Zealand households of different demographic profiles to estimate alternative versions of a preference-consistent complete demand system. From the estimated models, it computes the households' expenditure elasticities and the equivalence scales required by households of different demographic profiles to attain comparable utility levels.     

System estimates of potential output and the NAIRU

This paper proposes a new approach for estimating potential output and the NAIRU. The methodology models these key unobservable economic variables as latent stochastic trends within a trivariate system of observables comprising information on unemployment, GDP, and inflation. Identification is achieved through the use of a standard version of Okun's law and a Phillips curve. The performance of the procedure is investigated using Swedish quarterly data covering the time period 1970:1–1996:3. First version received: June 1997/final version received: September 1998     

Eco-efficiency of intensification scenarios for milk production in New Zealand

New Zealand (NZ) dairy farms used to be the lowest input and most efficient dairy farms of the world. However, intensification of the traditional pasture-based system has occurred over the last decade and has not always been accompanied by increased efficiency. The purpose of this paper is to produce an updated reference of the eco-efficiency of NZ dairy farm systems and to analyse the implications of intensification on their eco-efficiency. Results for an average NZ dairy farm system were compared with those for three dairy farmlet systems representing a wide range in intensification practices. A low input system (LI) (no N fertiliser, no brought-in feed supplement, stocking rate of 2.3 cows/ha) was compared with an N-fertilised farm system (NF) (170 kg fertiliser-N/ha/year, 3 cows/ha) representing a first level of intensification and with an N-fertilised and maize silage supplemented system (NFMS) (170 kg fertiliser-N/ha/year, 13 t DM maize silage/ha/year, 5.2 cows/ha), representing a possible future intensification option. Their eco-efficiency in terms of milk production and land use was compared using Life Cycle Assessment (LCA) methodology. NZ dairy farm systems rely on favourable temperate climate conditions and long-term perennial ryegrass/white clover pasture, to achieve eco-efficient milk production and land use compared to European systems. However, intensification of NZ dairy farms was shown to be detrimental to their eco-efficiency in terms both of milk production and land use functions and could greatly reduce their advantage compared to European systems. The eco-efficiency of LI was very high whatever the functional unit which is remarkable from an LCA perspective. NF and NFMS had a similar eco-efficiency except for energy use which corresponded to the most critical hot spot of NFMS. All studied NZ systems presented some areas for improvement where some new technologies available for dairy farms might play a promising role in the future. Finally, it should be highlighted that the comparison with European studies based on the literature available needs validation through a more comprehensive study using harmonised methodology and assumptions across countries.