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Estonan Economy : From Boom to crisis – Austerity versus Keynes ?

Estonan Economy : From Boom to crisis – Austerity versus Keynes ?. Andres Arrak, MA andres.arrak@gmail.com andresarrak.ee. Born: 17.07.58. Married, 3 daughters Education: 1976 – M. Härma Gümn . 1981 – BA,Tartu University, law 1984 – Master Studies at TU 1992 – MA , economics

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Estonan Economy : From Boom to crisis – Austerity versus Keynes ?

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  1. EstonanEconomy: FromBoomtocrisis – Austerity versus Keynes? Andres Arrak, MAandres.arrak@gmail.com andresarrak.ee
  2. Born: 17.07.58. Married, 3 daughters Education: 1976 – M.HärmaGümn. 1981 – BA,Tartu University, law 1984 – Master Studies at TU 1992 – MA, economics Career: 1984-1999 – lecturer of economics at TU 1989-2000 – ERIC Ltd, director 1989-2006 – Audentes University, 2006-2012 – Mainor Business School 2012-2013 – Estonian Business School 2009 – Press friend of the year 2011 – Public opinion leader of the year Andres Arrak, MA
  3. 15,0 10,0 5,0 0,0 -5,0 -10,0 -15,0 Estonian GDP byquarter Real growth, % Economiccardiogram? -20,0
  4. Estonian real GDP annual growth, % 11,7 12,0 10,1 9,7 10,0 8,9 8,3 7,8 7,5 8,0 6,8 6,6 6,3 6,3 5,9 6,0 4,3 4,2 3,3 4,0 3,2 2,0 2,0 0,0 - 0,3 - 2,0 - 1,6 - 4,0 - 4,2 - 6,0 - 6,5 - 8,0 Finland - 8,8 - 10,0 - 12,0 - 14,0 - 13,6 - 14,1 - 14,2 - 16,0 0 1 2 3 4 5 6 7 8 9 0 1 2 3 4 5 6 7 8 9 0 1 2 3 4 9 9 9 9 9 9 9 9 9 9 0 0 0 0 0 0 0 0 0 0 1 1 1 1 1 9 9 9 9 9 9 9 9 9 9 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 1 1 1 1 1 1 1 1 1 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2
  5. GLOBAL CRISIS 11,7 12,0 GLOBAL CRISIS 10,1 9,7 10,0 8,9 8,3 7,8 7,5 8,0 6,8 6,6 6,3 6,3 5,9 6,0 4,3 4,2 3,3 4,0 3,2 1,0 2,0 0,0 - 0,3 - 2,0 JOINING EU: 1. New markets, 2. Low%, 3. Credit and real estate boom 4. Tightlabour market - 1,6 - 4,0 JOINING €-ZONE Russiancrisis FLAT TAX - 4,2 Asianfinancialcrisis - 6,0 CURRENCY BOARD - 6,5 - 8,0 0% TAXRATE ON REINVESTED PROFIT - 8,8 - 10,0 - 12,0 WASN’T OUR FAULT GLOBAL CRISIS - 14,0 - 13,6 - 14,1 - 14,2 - 16,0 0 1 2 3 4 5 6 7 8 9 0 1 2 3 4 5 6 7 8 9 0 1 2 3 4 9 9 9 9 9 9 9 9 9 9 0 0 0 0 0 0 0 0 0 0 1 1 1 1 1 9 9 9 9 9 9 9 9 9 9 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 1 1 1 1 1 1 1 1 1 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2
  6. Nominallabourunitcostindex (2005=100)
  7. Housepriceindex (2005=100)
  8. Baltics: austerity versus Keynes
  9. GOVERNMENT DRAWS BACK GOVERNMENT INTERVENES NO SHRINKING GROWING NO SHRINKING GROWING NO SHRINKING Baltics: austerity versus Keynes AccordingtoKeynes: Whatreallyhappened? Governmentinvolvment: Result: sustainabledebtcrisis
  10. Whydidwefall so deep? What’snext?
  11. Estonia isvery small and very openeconomy Exportshare, 2008-2012 % of GDP
  12. Estonia isvery small and very openeconomy
  13. Exportsharein GDP, % 100,0 90,0 80,0 70,0 60,0 50,0 40,0 30,0 20,0 10,0 Postimees, 10.09.2013: decreasefrompreviousyear10%
  14. 12,0 11,7 10,1 10,0 9,7 8,9 8,3 8,0 7,8 7,5 ? 6,8 6,6 6,3 6,3 6,0 5,9 4,3 4,3 4,2 4,0 3,3 3,2 2,0 2,0 Shallwelosethe last Estonian beforethewages withFinland equalise? 0,0 - 0,3 9 0 9 9 - 1,6 1 1 - 2,0 - 4,0 - 4,2 - 6,0 - 6,5 - 8,0 - 8,8 - 10,0 - 12,0 - 13,6 - 14,0 - 14,1 - 14,2 - 16,0 What’snext? - 18,0
  15. Did Estonia playfool in 20 years? Averagewage In Estois 916 € 643 € 26 € 0 1 2 3 4 5 6 7 8 9 0 1 2 3 4 5 6 7 8 9 0 1 2 3 4 9 9 9 9 9 9 9 9 9 9 0 0 0 0 0 0 0 0 0 0 1 1 1 1 1 9 9 9 9 9 9 9 9 9 9 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 1 1 1 1 1 1 1 1 1 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2
  16. Did Estonia playfool in 20 years? 9 % 1000 % 90 % Inflation and Currentaccount: –22 % 916 € 643 € 26 € 0 1 2 3 4 5 6 7 8 9 0 1 2 3 4 5 6 7 8 9 0 1 2 3 4 9 9 9 9 9 9 9 9 9 9 0 0 0 0 0 0 0 0 0 0 1 1 1 1 1 9 9 9 9 9 9 9 9 9 9 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 1 1 1 1 1 1 1 1 1 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2
  17. Howwelost Ourcompe-titiveness Labourhourly Productivity, €
  18. Howwelost Ourcompe-titiveness Hourlylabour cost, €
  19. Thanksforyourattention! Andres Arrak andres.arrak@gmail.com andresarrak.ee
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