Theoretical and Practical Approaches for Determining Trend Output: an Application to Chile

Francisco Gallego and Christian Johnson ()

Journal Econom a Chilena (The Chilean Economy), 2001, vol. 4, issue 2, 27-58

Abstract: This article presents alternative output trend theories and discusses different estimations for Chile’s GDP, using quarterly data from 1986 to 2001. Among methods considered are the Hodrick-Prescott filter, Quadratic and Gaussian kernels, the wavelets filter, and structural vector autoregressive models (SVAR). Output trend estimates are very sensitive to idiosyncratic assumptions. However, the Hodrick-Prescott filter and SVAR models look more accurate for generating output gaps related to variables such as inflation. We also present confidence intervals for these two methodologies.

Date: 2001
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Persistent link: https://EconPapers.repec.org/RePEc:chb:bcchec:v:4:y:2001:i:2:p:27-58

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