Alternative Estimates of Output Gap for the Argentine Economy

Pedro Elosegui, Maria Garegnani (), Luis Lanteri (), Francisco Lepone and Juan Sotes-Paladino
Additional contact information
Francisco Lepone: Central Bank of Argentina

Ensayos Económicos, 2006, vol. 1, issue 45, 45-77

Abstract: The analysis of the output gap dynamics (the difference between the observed and the non-inflationary potential output) is a widely used tool for structural models employed by central banks. In such models, the output gap is a key variable to explain the dynamics of prices and wages. However, despite its potential as a relevant variable for policy decision-making, both the potential output and the output gap are not directly observable. For this reason, it is necessary to develop a strategy that may allow to improve its estimation using alternative methodologies. This paper describes several methodologies to estimate the potential output and the output gap for the Argentine economy. In particular, a method based on a neoclassical production function is described. Likewise, the paper includes estimates of the potential output constructed through different univariate and multivariate methods such as “State-Space” (Kalman filtering), multivariate Hodrick-Prescott (HP) filter and structural VAR. The final purpose of the paper is to give the Central Bank several tools to estimate such variable, and also evaluate their relative performance by considering their capacity to predict inflation evolution.

Keywords: Argentina; HP filter; Kalman filter; output gap; potential output; production function method; structural VAR (search for similar items in EconPapers)
JEL-codes: E22 E23 E32 (search for similar items in EconPapers)
Date: 2006
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.bcra.gob.ar/pdfs/investigaciones/BrechaProducto.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bcr:ensayo:v:1:y:2006:i:45:p:45-77

Access Statistics for this article

Ensayos Económicos is currently edited by Germán Feldman

More articles in Ensayos Económicos from Central Bank of Argentina, Economic Research Department Contact information at EDIRC.
Bibliographic data for series maintained by Federico Grillo ().