Potential growth in Central America and the Dominican Republic: Was there a pre-pandemic new normal?

This paper explores the potential growth of Central America and the Dominican Republic after the 2008-2009 crisis to shed light on their 2020 pre-pandemic macroeconomic vulnerability and to ascertain that the observed path is deviating more than before from its potential. Using Hodrick-Prescott filter by constrained minimization, production function, regime-switching models, and Bayesian model averaging, the main findings suggest a pre-pandemic regional slowdown. By country, there are mixed results. This scenario was not only driven by international factors but by particularities; on the one hand, statistical models show higher potential growth, and, in a less favorable context, the region would be closer to the structural performance; on the other hand, individual factors are hindering potential growth.

• Autores: Maldonado, Leonardo
• Fecha de publicación: 2021
• Institución: Universidad EAFIT
• Repositorio: Repositorio EAFIT
• Idioma: eng
• OAI Identifier: oai:repository.eafit.edu.co:10784/31404
• Acceso en línea: http://hdl.handle.net/10784/31404
• Palabra clave: Bayesian model avaraging; output gap; potential growth; production function; regime switching; Promedio bayesiano de modelos; brecha del producto; crecimiento potencial; función de producción; cambio de régimen
• License: Copyright © 2021 Leonardo Maldonado