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Publication Details
AFRICAN RESEARCH NEXUS
SHINING A SPOTLIGHT ON AFRICAN RESEARCH
economics, econometrics and finance
Capital flows and the boom-bust cycle: The case of Estonia
Economic Systems, Volume 34, No. 1, Year 2010
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Description
During 2000-2007, Estonia was among the fastest growing emerging market economies, but in late-2008 entered a deep recession. This paper examines shocks, institutions, and policies that have made Estonia's boom-bust cycle so severe. It finds that an open capital account, the prospect for EU entry, and the currency board facilitated massive capital inflows, which led to credit and real estate booms. In late-2008 a domestic slowdown was greatly amplified by the global financial and economic crisis. To resume sustainable growth, the country will need to regain competitiveness and rebalance resources to exports. Estonia's experience underscores the importance for other emerging market economies to retain some flexibility in their macroeconomic frameworks and approach capital account liberalization cautiously. © 2009 Elsevier B.V. All rights reserved.
Authors & Co-Authors
Brixiová, Zuzana
Tunisia, Tunis
African Development Bank Tunis
Vartia, Laura
France, Paris
L'organisation de Coopération et de Développement Economiques
Wörgötter, Andreas
France, Paris
L'organisation de Coopération et de Développement Economiques
Statistics
Citations: 66
Authors: 3
Affiliations: 2
Identifiers
Doi:
10.1016/j.ecosys.2009.11.002
ISSN:
09393625