This paper presents an estimated open economy dynamic stochastic general equilibrium model for Estonia. The model is designed to highlight the main driving forces behind the Estonian business cycle and to understand how euro area economic shocks and its monetary policy affect the small open...

This paper presents an empirical analysis of the inflation process in Estonia, Latvia and Lithuania within the framework of the New Keynesian Phillips Curve (NKPC) model of Galí and Gertler (1999) and Galí et al. (2001). An open economy extension by Leith and Malley (2003) and a NKPC model...

This paper examines the Law of One Price using Nielsen disaggregated price data covering 13 euro area countries and 45 different product categories over the time period 2008 to 2012. The empirical methodology is based on a non-structural log-linear regression with spatial effects in both the...

This paper ascertains the determinants of household saving in Estonia based on a microeconometric analysis of household budget surveys from 2002 to 2005. Higher income leads to more saving, but the effect is largest for unanticipated income shocks. Ownership of real estate does not affect...

The Permanent Income Hypothesis (PIH) entails that consumption reacts more strongly to persistent than to temporary income shocks. This prediction is tested using data from the Estonian Household Budget Surveys for 2002-2007. The dataset contains questions which make it possible to distinguish...