Assessing the supply of the Maltese economy using a production function approach

Grech, Aaron George and Micallef, Brian (2014): Assessing the supply of the Maltese economy using a production function approach.

Abstract

After outlining the various methods used to estimate potential output, this article presents estimates for Malta derived from one of the most commonly used methods, i.e. the production function approach. Given the uncertainty surrounding these kinds of estimates, they are compared with those made for Malta by other institutions using different methods. Based on this analysis and on a cross-country comparison, a number of policy recommendations and final observations are made.

• Item Type: MPRA Paper
• Language: English
• Keywords: potential output, production function, output gap, business cycle, Malta
• Subjects: E - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy > E23 - Production; E - Macroeconomics and Monetary Economics > E3 - Prices, Business Fluctuations, and Cycles > E32 - Business Fluctuations ; Cycles

References

IMF (1997), IMF estimates of potential output: theory and practice, IMF

EC (2009), Impact of the current economic and financial crisis on potential output, European Commission

Grech A.G. (2013), Adapting the Hodrick-Prescott filter for very small open economies, International Journal of Economics and Finance, 5(8), pp.39-53

Grech A.G (2004), Estimating the output gap for the Maltese economy, MPRA Paper No. 33663