On the Fast Track to EU Accession: Macroeconomic Effects and Policy Challenges for Estonia

Günther Taube and Rene Weber

No 1999/156, IMF Working Papers from International Monetary Fund

Abstract: This paper assesses the macroeconomic impact and policy challenges related to Estonia’s prospective accession to the EU and its potential adoption of the euro. Our analysis of the trade, financial, and fiscal channels includes a model-based illustrative scenario using MULTIMOD. We conclude that the welfare enhancing effects for Estonia of further EU integration are likely to outweigh the drawbacks of more pronounced macroeconomic imbalances that could accompany this process. To smooth Estonia’s accession-related adjustment, its fiscal and structural policies should be geared toward mitigating domestic demand pressures, promoting saving, and ensuring efficient public investment.

Keywords: WP; EU accession; EU membership; EU transfer; common market; EU request; transition; economic integration; Estonia; EU regulation; EU country; Exports; Imports; Tariffs; Eastern Europe; Western Europe; Baltics (search for similar items in EconPapers)
Pages: 41
Date: 1999-11-01
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