Estimating Sri Lanka's Potential Output

17 Pages Posted: 10 Apr 2014

See all articles by Ding Ding

Ding Ding

International Monetary Fund

John Nelmes

International Monetary Fund (IMF)

Roshan Anne Perera

International Monetary Fund (IMF)

Volodymyr Tulin

International Monetary Fund (IMF)

Date Written: March 2014

Abstract

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.

Keywords: Economic growth, Sri Lanka, Production, Business cycles, Economic models, Potential Output, Output Gap, Multivariate Filter, Inflation Expectations, Capacity Utilization, Unemployment, unemployment rate, equilibrium unemployment, equilibrium unemployment rate, nairu, inflation rate, recession, inflation objective, price level, inflation equation, aggregate demand, rate of inflation, lower inflation, inflation targeting, macroeconomic stability, rising inflation, non-accelerating inflation rate of unemployment, increase in inflation

JEL Classification: C32, C53, E31

Suggested Citation

Ding, Ding and Nelmes, John and Perera, Roshan Anne and Tulin, Volodymyr, Estimating Sri Lanka's Potential Output (March 2014). IMF Working Paper No. 14/40. Available at SSRN: https://ssrn.com/abstract=2423236

Ding Ding

International Monetary Fund ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

John Nelmes

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Roshan Anne Perera

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Volodymyr Tulin

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

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