Score contribution per author:
α: calibrated so average coauthorship-adjusted count equals average raw count
In this paper, we calculate the potential output and the output gap using a Bayesian-estimated DSGE model of Japans economy. For bridging the gap with conventional measures, we define our measure of potential output as a component of the efficient output generated only by persistent growth rate shocks. Our potential growth displays a high degree of smoothness and moves closely with conventional measures. Moreover, the output gap from our measure of potential output shows better forecasting performance for inflationin particular, at short horizonsthan other measures of output gap.