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Potential Output and Output Gap in Central America, Panama and Dominican Republic

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  • Mr. Christian A Johnson

Abstract

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.

Suggested Citation

  • Mr. Christian A Johnson, 2013. "Potential Output and Output Gap in Central America, Panama and Dominican Republic," IMF Working Papers 2013/145, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2013/145
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    References listed on IDEAS

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    Cited by:

    1. International Monetary Fund, 2016. "Nicaragua: 2015 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Nicaragua," IMF Staff Country Reports 2016/034, International Monetary Fund.
    2. Alexander Yu. Apokin & Irina B. Ipatova, 2016. "Structural Breaks in Potential GDP Of Three Major Economies: Just Impaired Credit or the “New Normal”?," HSE Working papers WP BRP 142/EC/2016, National Research University Higher School of Economics.
    3. Michael Fritsch & Alina Sorgner & Michael Wyrwich & Evguenii Zazdravnykh, 2016. "Historical Shocks and Persistence of Economic Activity: Evidence from a Unique Natural Experiment," Papers in Evolutionary Economic Geography (PEEG) 1607, Utrecht University, Department of Human Geography and Spatial Planning, Group Economic Geography, revised Apr 2016.
    4. Urbina, Jilber, 2014. "Producto Potencial y Brecha del Producto en Nicaragua [Potential output and output gap in Nicaragua]," MPRA Paper 75592, University Library of Munich, Germany, revised Dec 2015.

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