Steady State Growth of Vietnam Economy

Abstract

The paper estimates the steady state economic growth rate of Vietnam, defined as the equilibrium that the economy converges without new shocks. The method employs a Bayesian structural vector autoregressive model (BSVAR) which captures the Triffin policy trilemma at international financial integration. On a quarterly sample over Q2/2008-Q4/2019, the evidence records that the steady state growth based on Minnesota prior is 6.13%. This result is robust by normal-diffuse prior, normal-wishart prior, and timely average method. For policy implication, the Vietnamese government’s objective of an annual growth rate of 7.0% over 2021-2030 can only be attained during the economic expansion periods.