Costa Rica: Selected Issues and Analytical Notes

February 4, 2015

Preview Citation

Format: Chicago

Costa Rica: Selected Issues and Analytical Notes, (USA: International Monetary Fund, 2015) accessed September 19, 2024

Summary

This Selected Issues paper examines several real sector issues, including estimates of potential output, the effect of Intel’s withdrawal on gross domestic product (GDP), labor market and inequality and electricity prices in Costa Rica. The production function approach shows that the main drivers of fluctuations in GDP growth are total factor productivity (TFP) and labor supply. These results on TFP, however, should be interpreted with caution. The TFP measure is a residual—the difference between output growth and the growth in the quantity (and quality) of inputs. Estimates suggest that potential GDP growth is about 4.3 percent, the output gap is broadly closed, and Intel’s withdrawal will lower real GDP growth in about 1/2 percentage point. Significant wage premia are identified across public versus private sectors and some evidence of intergenerational inequality is also presented. Electricity tariffs are found to be regionally competitive albeit with inefficiencies in their determination.

Subject: Basel III, Currency markets, Exchange rate flexibility, Exchange rates, Financial markets, Fiscal consolidation, Fiscal policy, Foreign exchange

Keywords: Central America, Central bank net, CR, Currency markets, Debtor position, Exchange rate flexibility, Exchange rates, Fiscal consolidation, Fund staff estimate, Gdp, Global, Gradual adjustment, ISCR, Monetary policy rate, Percent of GDP, Production function, Unemployment rate

Publication Details

Pages:

100
Volume:

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DOI:

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Issue:

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Series:

Country Report No. 2015/030
Stock No:

1CRIEA2015002
ISBN:

9781475527025
ISSN:

1934-7685

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