Potential Output Growth in Emerging Market Countries: The Case of Chile
IMF Working Papers, September 1, 1997
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- Potential Output Growth in Emerging Market Countries: The Case of Chile
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Bibliographic details
- Authors: Jorge Roldos
- Published: September 1, 1997
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451947977.001
Summary findings
- The paper estimates potential output and the sources of growth in Chile during 1970-96.
- Actual output is cointegrated with the quality-adjusted measures of capital and labor.
- Constant returns to scale cannot be rejected.
- Estimates of potential output show a positive output gap in the years when the Chilean economy was deemed to be overheated.
- In 1986-90, the quality-adjusted labor variable explains close to 60 percent of the growth rate of GDP.
- In 1991-95, capital formation plays a dominant role.
- The contribution of TFP growth in Chile is relatively small, but, based on a comparison with European and East Asian experiences, it is expected to increase in the medium term.
Methodology and technical approach
- Production function approach with quality-adjusted measures of capital and labor.
- Cointegration analysis between actual output and the quality-adjusted measures of capital and labor.
- Tests for returns to scale indicate constant returns to scale cannot be rejected.
Period-specific contributions to GDP growth
- 1970-96: overall estimation period for potential output and sources of growth.
- 1986-90: labor quality contributes close to 60 percent of GDP growth.
- 1991-95: capital formation is the dominant contributor to GDP growth.
Role of total factor productivity (TFP)
- TFP growth contribution in Chile is relatively small over the study period.
- Comparative evidence with European and East Asian experiences suggests TFP contribution is expected to increase in the medium term.
Subject tags and keywords (as provided)
- Subjects: Labor, Output gap, Potential output, Production, Production growth, Total factor productivity
- Keywords: A. production function, Chile, East Asia, Emerging Markets, estimates of total factor productivity, GDP, growth experience, labor quality index, Output, Output gap, Potential output, production function, production function approach, Production growth, TFP growth, TFP growth rate, TFP series, Total factor productivity, WP
Jorge Roldos, "Potential Output Growth in Emerging Market Countries: The Case of Chile", IMF Working Papers, September 1, 1997.
Content in this bundle
- Potential Output Growth in Emerging Market Countries: The Case of Chile - WP/97/104