| Real Convergence in Malta and in the EU Countries after the Financial Crisis |
Brian Micallef |
| Central Bank of Malta, Malta |
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Corresponding Author:
Brian Micallef ,Email: micallefb@centralbankmalta.org |
| Copyright ©2020 Journal of Economic Integration |
| ABSTRACT |
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Strong economic growth after the 2008-2009 financial crisis led to a rapid rate of real convergence in Malta. This article compares Malta’s real convergence process with that of other EU27 economies post-financial crisis. A growth accounting framework is used to decompose the sources of growth and convergence from a supply-side perspective. The EU evidence of convergence is mixed. Malta’s convergence since 2010 was driven by a higher utilization of labor. The cross-country comparison identifies three important lessons for a country’s convergence process: one, the perils associated with rapid growth driven by the accumulation of imbalances; two, the need for a flexible adjustment process following an economic shock; and three, EU and euro area memberships are no panacea for real convergence, without institutions that are conducive to technological adoption and productivity growth.
JEL Classification
E24: Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital
O40: General
O47: Measurement of Economic Growth; Aggregate Productivity; Cross Country Output Convergence
O52: Europe |
| Keywords:
Real Convergence | Labor Productivity | Labor Utilization | Malta | EU
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