Estonia’s potential growth revisited
Estonia’s potential growth revisited

Summary/Abstract: There have been several data revisions to output statistics in Estonia during the past six ears as methodologies have been harmonised. These changes are significant enough to equire corrections to the earlier understanding of Estonia’s potential economic growth ate. In this paper the latest data vintage from 2009 is used to estimate Estonia’s otential output growth and output gap. The production function approach that has been used hows that the gap varies quite extensively, ranging from –8% in 1999 to +8% in 2007, while he average potential growth rate in 1997–2009 was around 6%. The macro model simulations xpect the potential growth rate to fall in the future. The fall in the marginal roductivity of production inputs makes growth slow to about 4–5% in the next five years, f there are no additional shocks to the economy.

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