Analyzing the Contributions of Economic Growth Factors in Romania

Abstract

This paper provides an empirical analysis of the macroeconomic growth in Romania from 2000-to 2017. The Cobb-Douglas production function was used to characterize the supply side of the economic capacity. Using quarterly data and based on the growth decomposition, we found the contributions of capital, labor, and Total Factor Productivity to the output growth, in three sub-periods from 2000–to 2017. These findings also highlighted the standard of living, when considering the capital and the output per worker basis. Using the Cobb-Douglas production function for the growth decomposition brings a better understanding of the driving forces behind GDP growth. The growth rates of output and of the production factors could vary considerably over time.