Theoretical and Applied Economics
No. 1 / 2025 (642), Spring
Estimating Romania’s potential GDP: a production function and multivariate approach
Bucharest University of Economic Studies, Romania
Andreea-Mădălina BOZAGIU
Bucharest University of Economic Studies, Romania
Abstract. This research assesses Romania's potential GDP and its variances employing the production function methodology and a multivariate approach. The Cobb-Douglas function measures potential production by integrating labor, capital, and total factor productivity (TFP), utilizing Kalman filtering for labor and the perpetual inventory approach for capital. TFP trends are derived using the Hodrick-Prescott filter. A multivariate filter enhances potential GDP estimates by correlating output gaps with inflation, unemployment, and capacity utilization. Bayesian methodologies guarantee reliable parameter estimate. The results indicate cyclical variations, with recessions and crises exerting enduring impacts on potential output. Structural changes and EU entry foster long-term resilience, although inflation and labor dynamics are crucial factors. This work enhances the precision of potential GDP calculation in a growing economy by integrating various estimation methodologies. It presents empirical information regarding the enduring impacts of economic shocks and furnishes insights for policymakers in formulating efficient fiscal and monetary responses to macroeconomic volatility.
Contents
The impact of agro-food imports from Ukraine on the Romanian market: a post-conflict economic analysis
An empirical analysis of foreign trade concentration between Türkiye and Egypt (2005-2023)
The three-ways linkages between domestic investment, exports and economic growth: new evidence from Saudi Arabia
Local resilience in the context of digital transition: development policy perspectives from Romania and Moldova
Customs unions and trade spillovers: from bilateral agreements to multilateral impact
The impact of foreign direct investment on carbon emissions in China: a provincial panel data analysis
Quantitative insights into the impact of financial inclusion on economic growth: an econometric evaluation of Arab countries (2011-2022)
The relationship between external factors and economic growth: Differences between the global financial crisis and the COVID-19 pandemic from a Granger causality perspective
The lasting impact of COVID-19. How the pandemic reshaped human behaviour
Asymmetric effect of monetary policy on stock market performance in the ECOWAS zone: empirical evidence from the NARDL approach
The effect of inflation and fiscal decentralization on income inequality in Sumatra Island of Indonesia: a panel data
Exploring the relationship between the Put Call Ratio and Market Indices: a comparative analysis of S&P 500 and BET
Macro-economic determinants of financial inclusion: evidence from West African Economic and Monetary Union (WAEMU)
Tax and macroeconomic framework. The case of Greece
Consumerism and capitalism: dynamic evolution, economic benefits, and ethical challenges
Business cycle synchronization of Tunisia and Euro Zone countries: a parametric and non-parametric analysis
Macro analysis of linkages between export, import and economic growth: evidence from the Indian economy
From lab to market: how governments and enterprises compose the future of innovation
Improving human development in West African countries: do cryptocurrencies matter?
Romanian knowledge and attitude on sustainability and sustainable clothing: exploring the reliability and validity of a measurement scale
Estimating Romania’s potential GDP: a production function and multivariate approach
Fiscal adjustment and economics growth in Senegal