To estimate the potential output and output gap of Thailand for applying to analyze the process of monetary policy by applying intermediated approach between Multivariate Hodrick-Prescott filter and Structural Vector Autoregression which is the new method improved from the approach of Rennison (2003). Research result finds correlation between output gap and inflation is 0.55 and in the short run supply side factors have more influent to inflation than output gap because supply side factors implicate with directly changing commodity and service prices. Besides, transmission of monetary policy conducting through adjusting interest rate to real economic sector takes time for 16 months. Since, transmission of monetary policy relies on behaviors of people change to direction of policy rate. From simulation the situation that high inflation from oil price shock and Thai economy may be impacted from world economic crisis in the future finds that if central bank increases the policy rate although high inflation condition dies out rapidly, Thai economy will be depreciated the capability to support the world economic crisis. On the other hands, if central bank decreases or remains the policy rate, it will accommodate to generate the excess demand in economy which is buffer supports the contraction in the future. This study recommends that the size of economic crisis can recommend the border of policy conduct. If an economic crisis is severe enough to destroy the world demand, inflation can be the second-best target to stimulate the economy because Thai inflation in the future tends to reduce follow oil price and world demand.
