Macroeconomics and the Maltese economy

Abstract

This book provides a general overview of the Maltese economy and links major macroeconomic theories with economic realities in M<:Jta. Most of the data pertains to 2009, as the book was written in 2010. An earlier version of this book was published i..1 1988, covering data up to 1986. As expected, major changes have occurred smce then. vVhen I was revising the text of the original edition of the book, it seemed as if I was living in another economic world. In 1986, the economy was to a very large extent controlled by the government, and the word 'globalisation' did not even feature in the text of the first publication. Now, 25 years later, the gover.:unent's role in the economy is mostly confined to administrative and regulatory functions, foreign trade as well as capital flows have been liberalised, and Malta forms part of the EU - one of the largest markets in the world - with the euro as ~ts legal tender. The book is divided into 18 chapters. The first four chapters deal with the major economic aggregates namely GDP, the sectors of the economy, population and the labour force. Chapters 5 to 8 relate to aggregate final expenditures, namely consumption, investment, government expenditure and e~ports, while Chapter 9 deals with the import content of these final expenditures. Chapter 10 explains the income multiplier process and examines how the final expenditures discussed in Chapters 5 to 8 can generate income through a series of spending and re-spending rounds. Chapters 11 and 12 cover money and inflation, while Chapters 13 to 16 deal with international aspects of the economy. The last two chapters relate to economic changes over time, with an overview of major developments since 1960 and a brief assessment of the economy's future prospects. Although there are some cross-refer2nces between one chapter and another, ~dividual chapters are more or less self-contained and can be read in any order.