Ülo Ennuste Economics

papers and articles in wordpress

Dear Mr. Åslund

Dear Mr. Åslund,

Martin Wolf (FT.com Why the Baltic states are no model”, May 1) has in this case most generously based his analysis of the Baltic countries economies on the most successful real indicator in these countries crises – actual gross domestic product.  

Less generous and more adequate alternatives would have been e.g. to deal with real domestically spendable net national income – actual individual consumption – real growth of poverty – real growth of economic inequality – contraction of employment – instability of prises – exodus and capital flight etc. Most importantly: competently saying – there has been no growth-boom prior to the 2007 crisis in the Baltic countries – because say 8-10% growth has been a standard for very low income/wages counties in the growth cycles.

Imaginary prospective potential GDP is not real directly measurable statistical indicator and unfortunately is absolutely not taking into consideration prospective real export opportunities. This imaginary indicator may be valuable for governmental administrative projections and future investments risks estimation – but never so for this situation. In the tiny open economies retrospective views where the main factors of influence on DGP growth have been first of all export conditions real potential. By the way Estonian real GDP growth crisis started already in the second half of 2007 as the result of political complications with the export possibilities to Russia* – thus to base the growth analysis of 2007 on potential GDP forecast is absolutely inadequate.

 

*) Ennuste, Ü. 2009. Estonian hyper-crisis lessons confirm importance of more effective high quality coordination/regulation and harmonisation: Mechanism design theoretic approach. In: Aksel Kirch and András Inotai (Eds.) EUROPEAN UNION: CURRENT POLITICAL AND ECONOMIC ISSUES. Institute for European Studies Tallinn School of Economics and Business Administration, 11-35: http://www.ies.ee/iesp/No6/iesp_no6.pdf  

 

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May 4, 2013 - Posted by | Uncategorized

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