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Effects of Macroeconomic Policies and Stock Market Performance on the Estonian Economy

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  • Yu Hsing
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    Abstract

    Based on a general equilibrium model, this study finds that real output in Estonia is positively associated with real quantity of money and negatively influenced by real depreciation of the kroon, real stock prices, and the expected inflation rate. Government deficit spending is found to be insignificant. Policy implications are that fiscal discipline pursued by the Estonian government is appropriate, that a stronger currency may better serve Estonia, and that the wealth effect of an increase in the stock price on real money balances is greater than the substitution effect.

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    Bibliographic Info

    Article provided by University of Economics, Prague in its journal Prague Economic Papers.

    Volume (Year): 2005 (2005)
    Issue (Month): 2 ()
    Pages: 109-116

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    Handle: RePEc:prg:jnlpep:v:2005:y:2005:i:2:id:256:p:109-116

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    Related research

    Keywords: wealth effect; substitution effect; stock prices; real depreciation; deficit spending;

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