Estimating Potential Output in Chile: A Multivariate Filter for Mining and Non-Mining Sectors

33 Pages Posted: 9 Dec 2016

See all articles by Patrick Blagrave

Patrick Blagrave

International Monetary Fund (IMF)

Marika Santoro

International Monetary Fund (IMF)

Date Written: October 2016

Abstract

Using a multivariate filter, we estimate potential growth rates in Chile's mining and non-mining sectors. Estimates for the mining sector incorporate information on copper prices, whereas estimates for non-mining reflect information on inflation and unemployment rates. To better understand the drivers of potential growth, we decompose estimates into capital, labor (adjusted for human-capital and hours worked), and total-factor productivity using a production-function. Our estimates of potential output in Chile suggest that an important part of the recent growth slowdown has been structural, with potential-output growth slowing to 21/2 percent in recent years, although it plausibly could be higher in the medium-term.

Keywords: Potential output, Chile, Mining sector, Copper, Commodity prices, External shocks, Economic growth, Capital accumulation, Labor markets, Total factor productivity, Production functions, Econometric models, Macroeconomic Modeling, Potential Output, Production Function

JEL Classification: C51, E31, E52

Suggested Citation

Blagrave, Patrick and Santoro, Marika, Estimating Potential Output in Chile: A Multivariate Filter for Mining and Non-Mining Sectors (October 2016). IMF Working Paper No. 16/201, Available at SSRN: https://ssrn.com/abstract=2882638

Patrick Blagrave (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Marika Santoro

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

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