An Estimation of the Output Gap Based on China′s Real-time Data and Its Revision:And on Forecasts Relationship between the Output Gap and Inflation

Based on the data from 1994 Q1 to 2008 Q4,this paper estimates China′s real-time,quasi real-time and final output gap by using Cubic Trends and HP Filter respectively.The analysis shows that China′s output gap during the period subjected to a large and highly persistent revision,indicating that there is a significant difference between the real-time output gap and the output gap based on the ex post revised data in China.Further comparison of the Phillips curve relationship between the real-time output gap and the final output gap with the inflation forecasts indicates that the inflation forecast performance of the real-time output gap is better than that of the final output gap.As monetary policy decisions always happen in real time and can not wait for the later revisions of output gap or other data,to distinguish real-time data and ex post revised data may be extremely important for economic analysis and policy decision.