Potential Output Growth Estimates for Central America and the Dominican Republic

By Roberto Garcia-Saltos, Fan Zhang, Iulia Ruxandra Teodoru

December 23, 2016

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Roberto Garcia-Saltos, Fan Zhang, and Iulia Ruxandra Teodoru. Potential Output Growth Estimates for Central America and the Dominican Republic, (USA: International Monetary Fund, 2016) accessed November 21, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper presents estimates of potential output for all Central American economies. Our findings are that potential output growth has declined in recent years in most economies of Central America. Lower capital accumulation and TFP growth are accounting for most of this decline. Apart from Costa Rica, there are no indications of significant economic slack in 2015 in Central America. Looking forward, potential growth in most Central American economies is expected to continue at an average of 4 percent in the medium-term due to structural constraints to capital and employment growth, and low TFP growth. Increasing potential growth, thus, should be a policy priority and structural reforms must be directed at improving business conditions, product and labor markets, and enhancing the capacity for innovation.

Subject: Employment, Labor, Labor force participation, Potential output, Production, Production growth, Total factor productivity

Keywords: Capital stock, Central America, Central American economy, Employment, Employment growth, Labor force participation, Macroeconomic modeling, Output gap, Potential output, Production function, Production growth, Productivity, TFP performance, TFP series, Total factor productivity, Western Hemisphere, WP

Publication Details

Pages:

36
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2016/250
Stock No:

WPIEA2016250
ISBN:

9781475563153
ISSN:

1018-5941

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