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Microfoundations of Economic Success

Lessons from Estonia
Edited by David G. Mayes, Professor of Banking and Financial Institutions, Director, Europe Institute and Director, NZ Governance Centre, University of Auckland, New Zealand
This book uses detailed data on individual firms and households to explore the basis behind Estonia’s record as the most successful of all the EU countries over the last decade. We find that much of the reason is the greater flexibility of the Estonian economy, in both price setting in employment and wages and in consumption. Estonia is also able to adjust to shocks more rapidly and with less cost than other countries. Coupled with a favourable macroeconomic policy and a good institutional structure and legal framework, Estonia will be an example to others despite the recent downturn.
Extent: 328 pp
Hardback Price: £94.00 Online: £84.60
Publication Date: 2009
ISBN: 978 1 84720 929 0
Availability: In Stock
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  • Economics and Finance
  • Development Economics
  • Money and Banking
This book explores the nature of the flexibility of Estonia’s rapid growth, that enables it to swiftly seize opportunities and weather crises without undue cost.

The distinguished cast of contributors draws upon detailed data on individual firms and households to explore the basis for Estonia’s record as the most successful of all the EU accession countries over the last decade. They conclude that much of this accomplishment can be attributed to the greater flexibility of the Estonian economy, both in price setting in employment and wages, and in consumption. The book also reveals that Estonia is able to adjust to shocks more rapidly and with less real impact than other countries. Coupled with a favourable macroeconomic policy and a good institutional structure and legal framework, this indicates that Estonia will be an excellent example to other countries despite the recent downturn.

This unique book will be of great interest to researchers and students of the economics of transition, and will prove invaluable to policy-makers and their advisors in both transition countries and the rest of the EU, as well as graduate students studying microeconomics and monetary policy.
Contributors: A. Dabušinskas, D. Kulikov, D.G Mayes, A. Paabut, M. Randveer, T. Rõõm, K. Staehr, L. Uusküla, P. Vahter
Contents:

Foreword

1. The Path of Transition in Estonia
David G. Mayes and Martti Randveer

2. Comparison of Pricing Behaviour of Firms in the Euro Area and Estonia
Aurelijus Dabušinskas and Martti Randveer

3. The Principles of Wage Formation in Estonian Companies
Tairi Rõõm and Lenno Uusküla

4. Productivity in Estonian Enterprises: The Role of Innovation and Competition
Priit Vahter

5. Liquidity and Productivity Shocks: A Look at Sectoral Firm Creation
Lenno Uusküla

6. A Microeconometric Analysis of Household Saving in Estonia: Income, Wealth and Financial Exposure
Dmitry Kulikov, Annika Paabut and Karsten Staehr

7. Estimates of Employment and Welfare Effects of Personal Labour Income Taxation in a Flat-Tax Country
Karsten Staehr

8. Outlook
David G. Mayes and Martti Randveer

Index