Comments on James Morley’s paper

Measuring or estimating economic slack has long been a challenge to central bank research and policymaking, particularly after a major economic event such as a financial crisis that might also affect the trend at which the economy normally expands. While it is still debatable which measure would best capture economic slack in conceptual terms, the output gap has been widely used by many. In this light, the paper by Prof. Morley is a good contribution not only to the current literature on the business cycle and monetary policy but also to practical policymaking in central banks. I believe it offers particularly useful information to some Asian central banks which, for various reasons, including data collection problems, can afford only a limited array of reliable cyclical indicators for their conduct of monetary policy.