Assessing potential output growth of the Maltese economy using a production function approach

Abstract

After outlining the various methods used to estimate potential output, this article presents estim- ates for Malta, the smallest member of the euro area, de- rived from one of the most commonly used methods, the production function approach. Given the uncertainty surrounding these kinds of estimates, these estimates are compared with those made for Malta by other in- stitutions using di erent methods. Based on this ana- lysis and on a cross-country comparison with other euro area economies, a number of observations are made that would enable potential growth to accelerate and result in a faster economic convergence.