Should Greece Follow Estonia’s Example? Rainer Kattel

One of the suggestions regarding Greece’s current woes is that it should cut its public spending, just like Estonia. But, Estonia’s massive cut in public spending, praised by both the EC and the IMF, has resulted in a 15% contraction in Estonia’s GDP in 2009, as compared to only 2% of Greece. Such simplistic fiscal retrenchment may thus worsen matters for Greece.

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