Estimating the Output Gap to Support the Management of Interest Rates in Vietnam

Giang Huong Nguyen
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Giang Huong Nguyen: The State Bank of Vietnam

No 05-2014, IHEID Working Papers from Economics Section, The Graduate Institute of International Studies

Abstract: In this paper, I apply three methods to estimate the output gap for Vietnam to support the conduct of monetary policy of the State Bank: the Hodrick-Prescott Filter, the production function approach and Bayesian estimation. I then compare the results obtained from these approaches and discuss their advantages and disadvantages to choose the optimal method for the estimation of the output gap for the State Bank of Vietnam. For the Bayesian approach, my paper closedly relies on the paper of Tim Willems (2011) with some modifications to fit the situation of Vietnam. The output gap estimated by Bayesian method appears to be the most consistent with the economic developments of Vietnam.

Pages: 33 pages
Date: 2014-02-25
New Economics Papers: this item is included in nep-mac and nep-tra
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Citations: View citations in EconPapers (1)

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