Republic of Estonia: Selected Issues

International Monetary Fund

No 2018/126, IMF Staff Country Reports from International Monetary Fund

Abstract: This Selected Issues paper analyzes the drivers of wage growth and inflation in Estonia. The analysis reveals that the role played by the inflation and inflation expectations in Estonia is different from those of the EU15. The impact of inflation on wage formation is smaller than in larger and richer countries with lower inflation volatility. This has limited the downward pressure on wages during the period of very low inflation in 2014–16. Although there has been an episode of wage growth leading inflation before the global financial crisis, the current simultaneous acceleration in prices and wages is not evidence of a developing wage-price spiral, as a significant share of the increase in inflation is owing to exogenous factors.

Keywords: ISCR; CR; pay; state; wage growth; minimum wage; EU average; spiral emerging; IMF staff calculation; gender pay gap; Wages; Public investment spending; Budget planning and preparation; Labor markets; Baltics; Western Europe; Europe (search for similar items in EconPapers)
Pages: 55
Date: 2018-05-24
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Persistent link: https://EconPapers.repec.org/RePEc:imf:imfscr:2018/126

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