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Potential Output and Output Gap in Central America, Panama and Dominican Republic
Author: Mr. Christian A Johnson
Series:
IMF Working Papers
Volume/Issue:
Volume 2013: Issue 145
Language:
English
Publication Date:
12 Jun 2013
DOI:
https://doi.org/10.5089/9781484322208.001
ISBN:
9781484322208
ISSN:
1018-5941
Pages:
42
Keywords:
WP; Potential growth; output gap; growth decomposition; switching; state-space model; output gap volatility; output gap-production function approach; output gap variability; standard deviation; CAPDR country; potential output gap; Potential output; Production growth; Sustainable growth; Total factor productivity; Central America
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IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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Potential Output is a key factor for debt sustaintability analysis and for developing strategies for growth, but unfortunately it is an unobservable variable. Using three methodologies (production function, switching, and state-space), this paper computes potential output for CAPDR countries using annual data. Main findings are: i) CAPDR potential growth is about 4.4 percent while output gap volatility is about 1.9 percent; ii) The highest-potential growth country is Panama (6.5 percent) while the lowest-growth country is El Salvador (2.6 percent); iii) CAPDR business cycle is about eigth years.
Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund