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Only in one case the imbalance indicator became non-significant (private savings in residential investment).
However, it also resembles the estimation of the Phillips curve, where the imbalance indicator (inflation) allows the cyclical component of the unemployment rate and, therefore, the potential rate (NAIRU) to be identified.
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Highlighted imbalance indicators are the most frequently used to indentify permanent factors.
Finally, the third group of imbalance indicators is real stocks, also as a percentage of GDP.
Open image in new window Fig. 2 Spain GDP vs. selected imbalance indicators.
It also builds on the production function framework, but considers the informational content of other imbalance indicators apart from inflation.
In recent years there has been a significant number of contributions to the literature on imbalance indicators.
As there are various imbalance indicators, the optimal approach would be to develop a multivariate approach to jointly incorporate all the informational content of the indicators.
However, it may also be reasonable to think of the temporary elements of TFP as being related to the imbalance indicators we are considering.
We have disregarded the imbalance indicators based on prices, to stress the differences with respect to the standard potential growth methodology.
In all cases, the stock imbalance indicators were not relevant in the identification of the sustainable component of the factors of the production function.
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