{
  "title": "Republic of Estonia: Selected Issues",
  "publication": "IMF Staff Country Reports, July 14, 2025",
  "sourceUrl": "https://www.imf.org/en/publications/cr/issues/2025/07/11/republic-of-estonia-selected-issues-568550",
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  "summary": "This Selected Issues paper revisits fiscal multipliers for Estonia with a view to highlighting policy trade-offs and providing growth-friendly options for fiscal consolidation. The pandemic triggered a sharp and partly permanent increase in government spending.",
  "sections": [
    {
      "heading": "Purpose and focus",
      "content": "- Reexamines fiscal multipliers for Estonia with a view to highlighting policy trade-offs and providing growth-friendly options for fiscal consolidation.\n- Asks whether recent measures have significant short-term effects on growth and seeks granular estimates of fiscal multipliers by type of instrument—on both revenue and spending—to shed light on potential short-term output costs and underpin policy advice on specific instruments for fiscal consolidation.\n- Concludes: \"The results indicate that multiplier effects in Estonia are not negligible.\""
    },
    {
      "heading": "Recent economic and fiscal context",
      "content": "- The pandemic triggered a sharp and partly permanent increase in government spending.\n- Demand for better quality and broader provision of public services has materialized.\n- Climate and ageing-related spending pressures are set to intensify over time.\n- Geopolitical risks have triggered a sharp increase in defense spending.\n- Despite the 2022–2024 protracted recession, Estonian authorities implemented policy responses."
    },
    {
      "heading": "Policy responses enacted",
      "content": "- Two rounds of wide-ranging tax changes affecting:\n  - personal income tax\n  - corporate income tax\n  - value added tax\n  - excises\n- Spending cuts based on comprehensive spending reviews were enacted."
    },
    {
      "heading": "Key analytical approach",
      "content": "- Uses granular estimates of fiscal multipliers by type of instrument for both revenue and spending to evaluate short-term output costs and to inform policy choices for consolidation."
    },
    {
      "heading": "Subject areas and keywords (as listed)",
      "content": "- Subject: Corporate income tax, Income, Income and capital gains taxes, Income tax systems, Labor productivity, National accounts, Production, Taxes\n- Keywords: Baltics, Corporate income tax, distribution of entrant firm, employment share, Europe, Global, IMF's Bucket Approach, Income, Income and capital gains taxes, Income tax systems, income taxation, Labor productivity, labor taxation\n\n---\n\n Content in this bundle\n\n- Republic of Estonia: Selected Issues; IMF Country Report No. 25/182; June 16, 2025\n  - Republic of Estonia: Selected Issues; IMF Country Report No. 25/182; June 16, 2025 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Republic of Estonia: Selected Issues; IMF Country Report No. 25/182; June 16, 2025 (PDF){rel=\"external\" type=\"application/pdf\"}"
    }
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    "[Markdown version](/en/publications/cr/issues/2025/07/11/republic-of-estonia-selected-issues-568550/index.md)",
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    "Published: July 14, 2025",
    "Series: IMF Staff Country Reports",
    "DOI: https://doi.org/10.5089/9798229017800.002",
    "Reexamines fiscal multipliers for Estonia with a view to highlighting policy trade-offs and providing growth-friendly options for fiscal consolidation.",
    "Asks whether recent measures have significant short-term effects on growth and seeks granular estimates of fiscal multipliers by type of instrument—on both revenue and spending—to shed light on potential short-term output costs and underpin policy advice on specific instruments for fiscal consolidation.",
    "Concludes: \"The results indicate that multiplier effects in Estonia are not negligible.\"",
    "The pandemic triggered a sharp and partly permanent increase in government spending.",
    "Demand for better quality and broader provision of public services has materialized.",
    "Climate and ageing-related spending pressures are set to intensify over time.",
    "Geopolitical risks have triggered a sharp increase in defense spending.",
    "Despite the 2022–2024 protracted recession, Estonian authorities implemented policy responses.",
    "Two rounds of wide-ranging tax changes affecting:",
    "Spending cuts based on comprehensive spending reviews were enacted.",
    "Uses granular estimates of fiscal multipliers by type of instrument for both revenue and spending to evaluate short-term output costs and to inform policy choices for consolidation.",
    "Subject: Corporate income tax, Income, Income and capital gains taxes, Income tax systems, Labor productivity, National accounts, Production, Taxes",
    "Keywords: Baltics, Corporate income tax, distribution of entrant firm, employment share, Europe, Global, IMF's Bucket Approach, Income, Income and capital gains taxes, Income tax systems, income taxation, Labor productivity, labor taxation",
    "**Republic of Estonia: Selected Issues; IMF Country Report No. 25/182; June 16, 2025**"
  ],
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