What was the Long Term Growth in the Chilean Economy? A Formal Answer for an Old Question

The objective of the present study is to estimate the economy growth rate in the context of full use of the productive resources. Time series univariete models, including a deterministic tendency (with mean breaks), and a space-state model that considers a stochastic tendency and a cyclic component, estimated by Kalman's filter were used. The cyclic component is calculated with and without regime changes (Markov-switching models), according to Friedman's idea-plucking model. The results indicate that the Chilean economy potential growth rate would be greater than 4% annually, accompanied by economic asymmetric cycles