Estonian Economy and Monetary Policy 1997

Monetary Developments & Policy Survey 1997

CONTENTS

INTRODUCTION
I. GENERAL SURVEY OF THE ESTONIAN ECONOMY
Domestic Supply
Private Consumption
Public Sector Consumption
Investments
Domestic Supply
Foreign Sector
Labour Market
Background Information
Fiscal Policy in Estonia: Objectives and Procedures
Changes in the Balance of Payments Statistics
Credit Rating
Estonia's Country Rating
II. INFLATION AND REAL EXCHANGE RATE OF THE KROON
Inflation in 1997
Long-term Development of Inflation
Impact of Short-term Factors
Real Effective Exchange Rate (REER) of the Kroon
III. MONEY, INTEREST RATES AND CAPITAL FLOWS
External Factors
Monetary Aggregates
Loans
Money and Foreign Exchange Market
Interest Rates
Background Information
About the Currency Board System
Currency Speculations
IV. FINANCIAL SECTOR
Banking
Securities Market
Bond Market
Stock Market
Other Financial Intermediaries
Background Information
Situation on Emerging Markets
Quicker Development of Financial Markets
Causes of Crisis
Crisis Intensifies
Conclusions
Stylized Facts About Financial Crises of the Last Decade
What is a Financial Crises?
Nordic Countries
Mexico in 1994
Central Europe and South-East Asia in 1997
Conclusions
Development of Financial and Real Estate Markets in the Context of Monetary Policy and Inflation
V. MAJOR DECISIONS MADE REGARDING ECONOMIC POLICY IN 1997
Problems Emerging at the Beginning of the Year and Measures Applied in April
Developments in Spring and Summer and Adjustment in October
Measures Applied in Economic Policy in Autumn
Background Information
Role of the International Monetary Fund
Estonia's Relations with the IMF