Variation Index of the Output Gap (VIOG): A New Way of Testing Potential GDP Estimations

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dc.contributor.affiliationUniversidad EAFIT
dc.contributor.authorPinilla Barrera, Alejandro
dc.contributor.authorHurtado Rendón, Álvaro
dc.contributor.authorVelásquez Ceballos, Hermilson
dc.coverage.spatialMedellín de: Lat: 06 15 00 N degrees minutes Lat: 6.2500 decimal degrees Long: 075 36 00 W degrees minutes Long: -75.6000 decimal degreeseng
dc.creator.emailapinill2@eafit.edu.co
dc.creator.emailahurtad1@eafit.edu.co
dc.creator.emailevelas@eafit.edu.co
dc.date.accessioned2024-04-22T19:36:17Z
dc.date.available2024-04-22T19:36:17Z
dc.date.issued2024-04
dc.description.abstractThe potential GDP plays a fundamental role in macroeconomic models used by policymakers to make decisions. Its nature as an unobservable variable has led to the proposition of various estimation techniques based on different assumptions about its generating process. This work proposes a methodology to evaluate the different techniques for estimating potential GDP: the Variation Index of Output Gap (V IOG). Inspired by the statistic mean absolute deviation and the work of Darvas, Vadas, et al. (2003), the V IOG measures the average absolute gap derived from a potential GDP estimation technique. Unlike other methodologies that assess the statistical performance of estimation techniques, the V IOG aims to provide a practical response to the subjective dilemma of potential GDP estimation depending on what policymakers seek: more aggressive economic policies, where a greater output gap is permitted, or more conservative ones, which show a smaller output gap. To illustrate this, an application using the Taylor rule is presented. The results suggest that the differences between using different methodologies to estimate potential GDP can be significant, especially in times of crisis, affecting policymakers’ decisionmaking, implying that depending on the technique used, more or less restrictive economic policy decisions may be taken.spa
dc.identifier.jelC22
dc.identifier.jelC32
dc.identifier.jelE23
dc.identifier.jelE32
dc.identifier.jelE37
dc.identifier.jelE61
dc.identifier.jelE63
dc.identifier.urihttps://hdl.handle.net/10784/33716
dc.language.isoengeng
dc.publisherUniversidad EAFITspa
dc.publisher.departmentEscuela de Economía y Finanzas. Centro Valor Públicospa
dc.rights.accessrightsinfo:eu-repo/semantics/openAccesseng
dc.rights.localAcceso abiertospa
dc.subject.keywordpotential GDPeng
dc.subject.keywordoutput gapeng
dc.subject.keywordbusiness cycleeng
dc.subject.keywordTaylor's ruleeng
dc.subject.keywordstatistical filterseng
dc.titleVariation Index of the Output Gap (VIOG): A New Way of Testing Potential GDP Estimationsspa
dc.typeworkingPapereng
dc.typeinfo:eu-repo/semantics/workingPapereng
dc.type.hasVersiondrafteng
dc.type.hasVersionVersión publicadaspa
dc.type.localDocumento de trabajo de investigaciónspa

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