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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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    Cited by:

    1. Michael Fritsch & Alina Sorgner & Michael Wyrwich & Evguenii Zazdravnykh, 2016. "Historical shocks and persistence of economic activity: evidence from a unique natural experiment," HSE Working papers WP BRP 143/EC/2016, National Research University Higher School of Economics.
    2. 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.
    3. 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.
    4. 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.

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