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Theoretical and Practical Approaches for Determining Trend Output: an Application to Chile

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  • Francisco Gallego Y.
  • Christian Johnson M

Abstract

This article presents alternative output trend theories and discusses different estimations for Chile’s GDP, using quarterly data from 1986 to 2001. Among methods considered are the Hodrick-Prescott filter, Quadratic and Gaussian kernels, the wavelets filter, and structural vector autoregressive models (SVAR). Output trend estimates are very sensitive to idiosyncratic assumptions. However, the Hodrick-Prescott filter and SVAR models look more accurate for generating output gaps related to variables such as inflation. We also present confidence intervals for these two methodologies.

Suggested Citation

  • Francisco Gallego Y. & Christian Johnson M, 2001. "Theoretical and Practical Approaches for Determining Trend Output: an Application to Chile," Journal Economía Chilena (The Chilean Economy), Central Bank of Chile, vol. 4(2), pages 27-58, August.
    • Handle: RePEc:chb:bcchec:v:4:y:2001:i:2:p:27-58
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    Cited by:

    1. Camila Figueroa & Jorge Fornero & Pablo García, 2019. "Hindsight vs. Real time measurement of the output gap: Implications for the Phillips curve in the Chilean Case," Working Papers Central Bank of Chile 854, Central Bank of Chile.

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