David Zeballos Coria
Juan Carlos Heredia Gómez
Paola Yujra Tonconi
The objective of this paper is to evaluate the cyclical behavior of the Bolivian economy based on a Markov-Switching Dynamic General Equilibrium model (MS-DSGE). Using a model for a small open economy, with monetary targeting and foreign-exchange intervention, results of Bayesian estimation provide evidence that some structural parameters of the model, such as the coefficients of the Central Bank’s reaction function, experienced a change of regime in 2000-2017. A similar behavior could also be verified for the volatilities of the structural shocks experienced by the Bolivian economy in that period.
Key words: Economic fluctuations, DSGE Model, Markov Switching, Bayesian Estimation.
JEL Classification: E3, E6.