Ouput, Inflation, and Unemployment
Monetary policymakers are concerned with the relationships among real GDP, the unemployment rate, and inflation. Information about these relationships can be uncovered by separating the data into two distinct components: trend and cyclical. The trend component can be defined by statistical techniques that draw a smooth line through the central tendency of the data. The cyclical component is then measured as the deviation of the variable from its trend.
Suggested citation: “Ouput, Inflation, and Unemployment,” Federal Reserve Bank of Cleveland, Economic Trends, no. 96-10, pp. 03-05, 10.01.1996.