Estimating Sri Lanka’s Potential Output

ByDing Ding, John Nelmes, Roshan Perera, Volodymyr Tulin

March 11, 2014

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

In this paper we present various techniques to estimate Sri Lanka’s potential output and output gap, including statistical and model-based approaches. Compared to conventional statistical filters that rely exclusively on information in a single series, the model-based approaches allow potential output estimates to incorporate information contained in observable data series including inflation, actual output, unemployment and capacity utilization. The estimation results suggest that Sri Lanka’s potential output has risen slightly in the last few years.

Subject: Capacity utilization, Inflation, Labor, Output gap, Potential output, Prices, Production, Unemployment rate

Keywords: Capacity Utilization, equilibrium unemployment unemployment rate, excess demand, Global, Inflation, inflation equation, Inflation Expectations, inflation objective, inflation-output trade-off, Multivariate Filter, Output Gap, output gap estimate, Potential Output, Unemployment, Unemployment rate, WP

Pages:
16
Volume:
2014
DOI:
https://doi.org/10.5089/9781484333938.001
Issue:
040
Series:
Working Paper No. 2014/040
Stock No:
WPIEA2014040
ISBN:
9781484333938
ISSN:
1018-5941

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