Template-Type: ReDIF-Paper 1.0 
Author-Name: Carlos Segura-Rodriguez 
Author-Name-First: Carlos 
Author-Name-Last: Segura-Rodriguez 
Author-Email:  segurarc@bccr.fi.cr 
Author-Workplace-Name: Department of Economic Research, Central Bank of Costa Rica 
Title:  Natural Real Interest Rate in an Open Small Economy: the Costa Rica´s Case
Abstract: This study updates the Costa Rica’s natural real interest rate (NRIT) estimate for the period between 2010’s first quarter and 2023’s third quarter. I use two different methodologies for this estimation: Holston, Laubach and Williams (2023)’s semi-structural model and a structural VAR proposed by Brzoza-Brzezina (2002). This study’s methodological contribution is to estimate an extension of Holston-Laubach-Williams framework to incorporate conditions that are inherent in an open and small economy. The main result is that the natural real interest rate has oscilated between 1, 18% and 1, 47% during the period in analysis, and has been in the interval between 1, 36% and 1, 44% after 2022. Further, I check that the real interest rate gap correlation with other economic variables, like output gap, inflation and real exchange gap, shows a sign that is expected. Finally, I conclude that the Central Bank’s monetary policy has been consistent with its objective of maintaning a low inflation. 
Length: 17 pages 
Creation-Date: 2024-02 
Publication-Status: Published  
File-URL: https://repositorioinvestigaciones.bccr.fi.cr/handle/20.500.12506/394   
File-Format: Application/pdf 
Number: 2403 
Classification-JEL: E31, E52, F41 
Keywords: Natural Interest Rate, Monetary Policy, Open Small Economy, Tasa de interés natural, Política monetaria, Economía abierta y pequeña
Handle: RePEc:apk:nottec:2403