Analysis of Input (Supply) Multipliers for the Maltese Economy on the Basis of the SIOTs for 2010 and 2015

Abstract

The goal of this study is to present and assess estimates of input (supply) multipliers within the context of the Maltese economy to identify in which economic sectors it is the most beneficial to allocate primary resources with the aim to support economic growth. Via the application of the Ghoshian Supply-Driven Model, this study presents the first highly disaggregated input (supply) multiplier estimates for the Maltese economy based on the 2010 and 2015 Symmetric Input-Output Tables. This study also includes a comparative analysis between the years 2010 and 2015 to assess changes in the input (supply) multipliers ranking across economic sectors. Based on the 2015 Symmetric Input-Output Table, potential output is mostly increased following the additional allocation of primary inputs to the Manufacturing of other non-metallic mineral products sector following the highest input (supply) multiplier estimate, keeping all else constant. Furthermore, based on the 2010 Symmetric Input-Output Table, the Advertising and market research sector registered the highest input (supply) multiplier. The input (supply) multipliers are subject to the traditional input-output framework and the supply-side modelling assumptions. However, they do provide estimates on the potential change in economy-wide output following exogenous primary input shocks in every sector. In other words, the input (supply) multipliers provide policy makers a guide in which economic sector it is most beneficial to allocate primary inputs, such as labour supply, with the aim of supporting economic growth. The derived input (supply) multipliers may be utilised to aid in the formation of industry specific labour market policies with the aim of supporting overall economic expansion.