Estimation and evaluation of potential output dyanamics in an emerging country
Master Thesis
2009
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University of Cape Town
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Abstract
The aim of the dissertation is to give an overview of some of the most relevant and popular methods suggested for estimating potential output and the output gap. Three alternative methodologies - the Hodrick-Prescott filter, the production function approach and the SVAR approach - are compared and assessed empirically with respect to data representing the economic development of Uruguay in the last twenty years. Given the recent growth slowdown and abrupt recovery of Uruguay's GOP, the objective is to provide evidence on whether such changes are principally a cyclical shortfall or instead represent a structural shift towards a new growth path. Once the output gaps are estimated, their capacity as indicators of inflationary pressures is assessed through a basic gap model in which the change in inflation is related to the output gap, the money supply and the terms of trade.
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Includes bibliographical references (leaves 93-102).
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Theoduloz, T. 2009. Estimation and evaluation of potential output dyanamics in an emerging country. University of Cape Town.