Abstract

MALDONADOA, Leonardo. POTENTIAL GROWTH IN CENTRAL AMERICA AND THE DOMINICAN REPUBLIC: WAS THERE A PRE-PANDEMIC NEW NORMAL?. ecos.econ. [online]. 2020, vol.24, n.51, pp.80-115.  Epub Jan 20, 2022. ISSN 1657-4206.  https://doi.org/10.17230/ecos.2020.51.4.

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.

Keywords : Bayesian model averaging; output gap; potential growth; production function; regime switching..

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