The Bank’s macro-econometric model is the main tool used by the Bank for making forecasts of the Maltese economy. Such forecasts are subsequently published in the Bank’s Quarterly Review and Annual Report.

While the model is grounded in neo-classical long-run principles, it incorporates Keynesian short-run effects.  In brief, the supply side of the model is based on a Cobb-Douglas production function, incorporating labour and capital inputs, and oil as an intermediate input.  At the same time, in the short run output is demand determined, on the basis of the expenditure approach to GDP.

The document presents the various relationships between a number of economic variables, together with their respective estimated coefficients, to explain aggregate supply and demand, the labour market and price formation.

The model may be accessed through this link.

Please note that this version of the model was updated in January 2011. As part of an on-going process, the model is being evaluated and reviewed. A revised version of the model will be placed on the Bank's website once the evaluation process is complete.