Microfoundations of economic success. Lessons from Estonia

Abstract:
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 contributors draw 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 book will be of interest to researchers and students of the economics of transition, and will prove useful 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.

Contents:
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