Abstract:

The assessment of the cyclical position of the economy represents an important part of the monetary policy decision-making process. Its relevance in this context is given by the fact that the indicator is a measure of the degree of the inflationary pressures in the economy and connects the real economic activity and inflation. In this paper, we use a relatively new approach for estimating the real-time output gap, based on a multivariate Beveridge-Nelson decomposition with a mixed-frequency Bayesian VAR. The method was initially proposed by Morley and Wong (2020) and Berger et al (2023) and it was customized for Romanian economic characteristics and data. The data set covers nine monthly indicators, mostly representative for real economy, but also for confidence, commodity and financial markets to which add the quarterly GDP growth, in real terms. The results highlight at the time of the analysis the presence of an excess of demand in the economy, following the rebound of the consumption from the Covid-19 pandemic. For the last quarter of the 2022, the final estimate value of the output gap is around 3 %.