Estimating Potential Output in Chile: A Multivariate Filter for Mining and Non-Mining Sectors
33 Pages Posted: 9 Dec 2016
Date Written: October 2016
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: Suggested Citation