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ABSTRACT. Labour productivity in Malta has been sluggish after the crisis. This study looks at the determinants of productivity in Malta by exploiting information from a unique firm-level survey using an empirical multivariate framework. Labour productivity is more likely to be lower in firms with a higher labour share, suggesting that the significant shift towards labourintensive services observed in recent years is likely to be an important driver behind the slowdown in productivity. Outsourcing and the characteristics of the workforce are also important determinants. On the contrary, credit constrained firms and those hit by adverse demand conditions are less likely to experience an improvement in productivity.

Malta registered the largest increase in the female participation rate among European countries since 2008. This increase was driven by various policy initiatives aimed to attract more females to the labour market but also by the changing role of women in society. Furthermore, at 53.8% in 2015, the female participation rate in Malta still remains relatively low by European standards, suggesting further catching-up potential. The trend increase in participation, driven mostly by females, is estimated to have contributed, on average, to 0.8 percentage points per annum to Malta's potential GDP between 2008 and 2015. The impact of reforms is calculated by adjusting the post-2008 participation rate to long run trends in Maltese society, as well as using a cohort model that accounts for the changing demographics and education attainment of the workforce. The median impact of the estimates presented in this paper suggests that around half of the increase in the female participation rate is attributable to reforms. These reforms are estimated to have raised potential GDP growth in Malta by around 0.3 percentage point per annum between 2008 and 2015.JEL classification: E24, J11, J21, J24

This study presents various empirical estimates of Okun's Law in Malta for the period 2000-2016. A better understanding of Okun's relationship is important for the design of macroeconomic policies as well as for forecasting purposes. In Malta, the relationship between output and unemployment is relatively weak compared to other European countries. Among the demand components, unemployment is most sensitive to private consumption and exports. The relationship is also asymmetric, with the response of unemployment to output tending to be more pronounced during recessions. Stability tests suggest that Okun's relationship is not stable, although the link has become more pronounced in recent years, while the unemployment rate consistent with full employment has been on a downward trend.Estimates from an unobserved components model suggests that Okun's Law is quite robust at cyclical frequency, with potential time-variation in the relationship being ascribed to the trend components.

Purpose The purpose of this paper is to compute an aggregate misalignment index using a multiple indicator approach to identify under- or over-valuation of house prices in Malta based on fundamentals. Design/methodology/approach A total of six indicators are used that capture households, investors and system-wide factors: the house price-to-Retail Price Index ratio, the price-to-hypothetical borrowing volume ratio, price-to-construction costs ratio, price-to-rent ratio, dwelling investment-to-GDP ratio and the loan bearing capacity. The weights are derived using principal component analysis. The analysis is performed using both the house price indices of the National Statistics Office (NSO) and the Central Bank of Malta (CBM), which are based on contract and advertised prices, respectively. Findings House prices in Malta were overvalued by around 20 to 25 per cent in the pre-crisis boom. This disequilibrium started to be corrected following the decline in house prices, with the CBM and NSO house price cycles reaching a trough in 2013 and 2014, respectively. At the trough, house prices were undervalued by around 10 to 15 per cent. Since then, house prices started to recover although the recovery in advertised prices was more pronounced compared to that based on contract prices. In mid-2017, advertised house prices were slightly overvalued, while contract prices still have to reach their equilibrium level. The dynamics from the misalignment index, including its peaks and troughs, are remarkably similar to the range derived from statistical filters. Practical implications Estimates of house price misalignment have both economic and financial stability implications. Originality/value This paper allows for a decomposition of the house price cycle, tailored for the particular characteristics of the Maltese housing market. It also takes into account the relationship between house prices and private sector rents, which in recent years have been buoyed, among other factors, by the high inflow of foreign workers and changing patterns in the tourism industry.