Analysis of Potential Production in Morocco

Abstract

In recent years, economic developments in a number of advanced and developing countries have been marked by a decline in growth. Many studies have shown that a large part of this depreciation is explained by that of potential growth. In this respect, the development of potential growth has become one of the most important economic issues in that it affects the conduct of monetary policy and the management of public finances. The objective of this article is to propose an estimate of potential output in Morocco, based on econometric modeling of the Cobb Douglass function based on three variables: Real Gross Domestic Product (GDP), Capital Stock (K) and employment level (L). Using annual data covering the period from 1982 to 2019, representing a sample of 38 observations.

The results obtained show a decrease in potential output in Morocco from 2011 onwards, mainly due to the slowdown in the rate of change of GFCF to 3.8% on average between 2011 and 2019, the declining employment rate and also the negative contribution of overall factor productivity.

From the results of this study it would be possible to determine the output gap, that is, the gap between actual and potential output. The latter is an important variable for the conduct of monetary policy, as it is a major source of inflationary pressures in the economy.

JEL Classification : E00, E23, D2, D24

Paper type: Empirical research