http://www.bis.org/cbhub/list/series/sid_65/index.rss Research hub papers by series: Bank of Estonia Working papers en http://www.eestipank.ee/sites/eestipank.ee/files/publication/en/WorkingPapers/2014/wp08_2014.pdf Bank of Estonia Working papers by Liina Malk Determinants of Reservation Wages: Empirical Evidence for Estonia 2014-12-18T17:32:59Z This paper provides an empirical analysis of the individual and macroeconomic determinants of reservation wages with a particular focus on the influence of unemployment duration. Data from the Estonian Labour Force Survey 2011-2013 and instrumental variable regression analysis are used for estimating the determinants of reservation wages. The findings indicate that personal characteristics, the household's income level and the regional unemployment rate are important factors that affect reservation wage setting. In addition, it appears that unemployment duration has a significant negative influence on the reservation wage, which is mainly driven by men and older individuals. Determinants of Reservation Wages: Empirical Evidence for Estonia 2014-12-18T17:32:59Z Abstract http://www.eestipank.ee/en/publication/working-papers/2014/82014-liina-malk-determinants-reservation-wages-empirical-evidence-estonia Full text http://www.eestipank.ee/sites/eestipank.ee/files/publication/en/WorkingPapers/2014/wp08_2014.pdf Liina Malk Liina Malk 2014-12-18 Bank of Estonia Working papers J31 J64 http://www.eestipank.ee/sites/eestipank.ee/files/publication/en/WorkingPapers/2014/wp07_2014.pdf Bank of Estonia Working papers by Jaanika Meriküll, Tairi Rõõm One Currency, One Price? Euro Changeover-Related Inflation in Estonia 2014-09-29T17:32:00Z This paper studies euro changeover-related inflation using disaggregated price level data. The difference-in-differences approach is used and the control group for the treatment country, Estonia, is built from 12 euro area countries. The Nielsen Company disaggregated price data are employed at product, brand and shop-type level. The results indicate that while the overall inflationary effect of euro adoption was modest, the effects were significantly different across various market segments. Changeoverrelated inflation was higher for products that were relatively cheaper than the euro area average. Inflationary effects were stronger in smaller shops. One Currency, One Price? Euro Changeover-Related Inflation in Estonia 2014-09-29T17:32:00Z Abstract http://www.eestipank.ee/en/publication/working-papers/2014/072014-jaanika-merikull-tairi-room-one-currency-one-price-euro-changeover-related-inflation-estonia Full text http://www.eestipank.ee/sites/eestipank.ee/files/publication/en/WorkingPapers/2014/wp07_2014.pdf Jaanika Meriküll Tairi Rõõm Jaanika Meriküll, Tairi Rõõm 2014-09 Bank of Estonia Working papers D49 E58 P46 http://www.eestipank.ee/sites/eestipank.ee/files/publication/en/WorkingPapers/2014/wp06_2014.pdf Bank of Estonia Working papers by Tairi Rõõm, Katri Urke The Euro Changeover in Estonia: Implications for Inflation 2014-09-22T16:16:00Z Estonia changed over from the kroon to the euro in January 2011. This paper analyses the inflationary effect of this event. The analysis is based on the Harmonised Indices of Consumer Prices. The difference-in-differences method is employed where the treated group is Estonia and the control group consists of the other EU member states. The estimation results imply that the inflationary impact of the euro changeover was either insignificant or small in magnitude, depending on which treatment period is considered. The acceleration in inflation mostly occurred in the second half of 2010, during the six-month period prior to the adoption of the euro. Although the actual effect of the euro changeover on inflation was modest, most Estonian citizens felt that the introduction of the new currency increased consumer prices considerably. The Euro Changeover in Estonia: Implications for Inflation 2014-09-22T16:16:00Z Abstract http://www.eestipank.ee/en/publication/working-papers/2014/62014-tairi-room-katri-urke-euro-changeover-estonia-implications-inflation Full text http://www.eestipank.ee/sites/eestipank.ee/files/publication/en/WorkingPapers/2014/wp06_2014.pdf Katri Urke Tairi Rõõm Tairi Rõõm, Katri Urke 2014-09 Bank of Estonia Working papers D49 E58 P46 http://www.eestipank.ee/sites/eestipank.ee/files/publication/en/WorkingPapers/2014/wp05_2014.pdf Bank of Estonia Working papers by Fabio Filipozzi and Kersti Harkmann Currency Hedge - Walking on the Edge? 2014-09-18T12:31:59Z We study whether it is possible to find optimal hedge ratios for a foreign currency bond portfolio to lower significantly the risk and increase the risk adjusted return of a portfolio. The analysis is conducted from the perspective of euro area based investors to whom short-selling restrictions might apply. The ordinary least squares approach is challenged with the optimal hedge ratios found by the DCC-GARCH approach in order to investigate whether time-varying hedging is superior to the standard constant hedge ratios found by OLS. We find that hedging significantly lowers the portfolio risk in domestic currency terms and improves the Sharpe ratios for both single instrument and equally weighted multi asset portfolios. Optimal hedging using the standard OLS approach and using time-varying hedging give similar results, the latter being superior to the first in terms of risk-adjusted return. Currency Hedge - Walking on the Edge? 2014-09-18T12:31:59Z Abstract http://www.eestipank.ee/en/publication/working-papers/2014/52014-fabio-filipozzi-kersti-harkmann-currency-hedge-walking-edge Full text http://www.eestipank.ee/sites/eestipank.ee/files/publication/en/WorkingPapers/2014/wp05_2014.pdf Fabio Filipozzi Kersti Harkmann Fabio Filipozzi and Kersti Harkmann 2014-09-18 Bank of Estonia Working papers C32 C58 G11 G15 G23 G32 http://www.eestipank.ee/sites/eestipank.ee/files/publication/en/WorkingPapers/2014/wp04_2014.pdf Bank of Estonia Working papers by Juan Carlos Cuestas, Karsten Staehr The Great (De)leveraging in the GIIPS Countries. Domestic Credit and Net Foreign Liabilities 1998-2013 2014-09-08T17:32:59Z This paper considers the relationship between domestic credit and foreign capital flows in the GIIPS countries before and after the outbreak of the global financial crisis. Cointegration analyses on the pre-crisis sample reveal that domestic credit and net foreign liabilities are cointegrated for Greece, Italy, Portugal and Spain, but not for Ireland. For the first four countries the long-run coefficient is in all cases around one, suggesting a one-to-one relationship between domestic leveraging and foreign capital inflows. Estimation of VECMs on data from the pre-crisis period shows that the adjustment to deviations from the long-run relationship takes place through changes in domestic credit for Greece and Italy, while the adjustment is bidirectional for Portugal and Spain. These results suggest that push from foreign capital inflows was an important factor in the pre-crisis leveraging. The deleveraging after the crisis was largely unrelated to developments in foreign capital flows. The Great (De)leveraging in the GIIPS Countries. Domestic Credit and Net Foreign Liabilities 1998-2013 2014-09-08T17:32:59Z Abstract http://www.eestipank.ee/en/publication/working-papers/2014/42014-juan-carlos-cuestas-karsten-staehr-great-deleveraging-giips-countries-domestic-credit-and-net Full text http://www.eestipank.ee/sites/eestipank.ee/files/publication/en/WorkingPapers/2014/wp04_2014.pdf Juan Carlos Cuestas Karsten Staehr Juan Carlos Cuestas, Karsten Staehr 2014-09-08 Bank of Estonia Working papers C32 E44 E51 F32 http://www.eestipank.ee/sites/eestipank.ee/files/publication/en/WorkingPapers/2014/wp03_2014.pdf Bank of Estonia Working papers by Juan Carlos Cuestas, Luis A. Gil-Alana and Paulo José Regis On the Changes in the Sustainability of European External Debt: What Have We Learned 2014-09-04T12:33:00Z In this paper we aim to analyse the level of sustainability of external debt and, more importantly, how it has changed for a number of European economies. Given the severity of the crisis since 2008, we argue that the path of external debt burdens may have changed since the start of the crisis, given the concerns about debt accumulation in most countries. We follow the advice of Bohn (2007) and analyse the reaction of present debt accumulation to past debt stock, incorporating the possibility of endogenously determined structural breaks in this reaction function. We find that structural breaks happen in most cases after 2008, highlighting the importance of the policy measures taken by most governments. On the Changes in the Sustainability of European External Debt: What Have We Learned 2014-09-04T12:33:00Z Abstract http://www.eestipank.ee/en/publication/working-papers/2014/32014-juan-carlos-cuestas-luis-gil-alana-paulo-jose-regis-changes-sustainability-european-external Full text http://www.eestipank.ee/sites/eestipank.ee/files/publication/en/WorkingPapers/2014/wp03_2014.pdf Juan Carlos Cuestas Paulo José Regis Luis A. Gil-Alana Juan Carlos Cuestas, Luis A. Luis Gil-Alana and Paulo José Regis 2014-09-04 Bank of Estonia Working papers C22 E31 E32 http://www.eestipank.ee/en/publication/working-papers/2014/32014-juan-carlos-cuestas-luis-gil-alana-paulo-jose-regis-changes-sustainability-european-external Bank of Estonia Working papers by Juan Carlos Cuestas, Luis A. Gil-Alana and Paulo José Regis On the Changes in the Sustainability of European External Debt: What Have We Learned 2014-09-04T12:33:00Z In this paper we aim to analyse the level of sustainability of external debt and, more importantly, how it has changed for a number of European economies. Given the severity of the crisis since 2008, we argue that the path of external debt burdens may have changed since the start of the crisis, given the concerns about debt accumulation in most countries. We follow the advice of Bohn (2007) and analyse the reaction of present debt accumulation to past debt stock, incorporating the possibility of endogenously determined structural breaks in this reaction function. We find that structural breaks happen in most cases after 2008, highlighting the importance of the policy measures taken by most governments. On the Changes in the Sustainability of European External Debt: What Have We Learned 2014-09-04T12:33:00Z Abstract http://www.eestipank.ee/en/publication/working-papers/2014/32014-juan-carlos-cuestas-luis-gil-alana-paulo-jose-regis-changes-sustainability-european-external Full text http://www.eestipank.ee/en/publication/working-papers/2014/32014-juan-carlos-cuestas-luis-gil-alana-paulo-jose-regis-changes-sustainability-european-external Juan Carlos Cuestas Paulo José Regis Luis A. Gil-Alana Juan Carlos Cuestas, Luis A. Gil-Alana, Paulo José Regis 2014-09-04 Bank of Estonia Working papers C22 E31 E32 http://www.eestipank.ee/sites/eestipank.ee/files/publication/en/WorkingPapers/2014/wp01_2014.pdf Bank of Estonia Working papers by Jaanika Meriküll, Tairi Rõõm Are Foreign-Owned Firms Different? Comparison of Employment Volatility and Elasticity of Labour Demand 2014-03-27T17:32:00Z This paper analyses differences in employment volatility in foreign-owned and domestic companies using firm-level data from 24 European countries. The presence of foreign-owned companies may lead to higher employment volatility because subsidiaries of multinational companies react more sensitively to changes in labour demand in host countries or because they are more exposed to external shocks. We assess the conditional employment volatility of firms with foreign and domestic owners using propensity score matching and find that it is higher in foreignowned firms in about half of the countries that our study covers. In addition, we explore how and why labour demand elasticity differs between these two groups of companies. Our estimations indicate that labour demand can be either more or less elastic in subsidiaries of foreign-owned multinationals than in domestic enterprises, depending on the institutional environments of their home and host countries. When FDI originates from a region with a more flexible institutional environment then the elasticity of labour demand is smaller in absolute value in foreign-owned firms. In the opposite case the elasticity of labour demand is higher. A potential explanation for this empirical finding is that it is easier for multinational companies to substitute between factor inputs and therefore they have more flexibility than domestic firms in choosing which channels of adjustment to use. Are Foreign-Owned Firms Different? Comparison of Employment Volatility and Elasticity of Labour Demand 2014-03-27T17:32:00Z Abstract http://www.eestipank.ee/en/publication/working-papers/2014/12014-jaanika-merikull-tairi-room-are-foreign-owned-firms-different-comparison-employment-volatility Full text http://www.eestipank.ee/sites/eestipank.ee/files/publication/en/WorkingPapers/2014/wp01_2014.pdf Jaanika Meriküll Tairi Rõõm Jaanika Meriküll, Tairi Rõõm 2014-01-29 Bank of Estonia Working papers http://www.eestipank.ee/sites/default/files/publication/en/WorkingPapers/2013/wp09_2013.pdf Bank of Estonia Working papers by Dmitry Kulikov, Aleksei Netunajev Identifying Monetary Policy Shocks via Heteroskedasticity: a Bayesian Approach 2013-09-13T17:34:00Z In this paper we contribute to the literature on the identification of macroeconomic shocks by proposing a Bayesian SVAR with timevarying volatility of innovations that depend on a hidden Markov process, referred to as an MS-SVAR. With sufficient statistical information in the data, the distinct volatility regimes of the errors allow all the structural SVAR matrices and impulse response functions to be identified without the need for conventional a priori parameter restrictions. We give mathematical identification conditions and propose a flexible Gibbs sampling approach for the posterior inference on MS-SVAR parameters. The new methodology is applied to the US, euro area and Estonian macroeconomic series, where the effects of monetary policy and other shocks are examined. Identifying Monetary Policy Shocks via Heteroskedasticity: a Bayesian Approach 2013-09-13T17:34:00Z Abstract http://www.eestipank.ee/en/publication/working-papers/2013/92013-dmitry-kulikov-aleksei-netsunajev-identifying-monetary-policy-shocks-heteroskedasticity Full text http://www.eestipank.ee/sites/default/files/publication/en/WorkingPapers/2013/wp09_2013.pdf Aleksei Netunajev Dmitry Kulikov Dmitry Kulikov, Aleksei Netunajev 2013-09-13 Bank of Estonia Working papers http://www.eestipank.ee/sites/default/files/publication/en/WorkingPapers/2013/wp08_2013.pdf Bank of Estonia Working papers by Boris Blagov Financial Crises and Time- Varying Risk Premia in a Small Open Economy: A Markov- Switching DSGE Model for Estonia 2013-09-10T17:34:00Z Under a currency board the central bank relinquishes control over its monetary policy and domestic interest rates converge toward the foreign rates. Nevertheless a spread between both usually remains. This spread can be persistently positive due to increased risk in the economy. This paper models that feature by building a DSGE model with a currency board, where the domestic interest rate is derived as a function of the foreign rate, the external debt position and an exogenous risk premium component. Applying Markov-Switching allows for time variation in the volatility of the risk premium component. The model shows that the size of risk premia shocks in an economy with a currency board is small in quiet times but the shocks are much larger during crises, which the standard model would understate. The model is applied with Bayesian methods to Estonian data and is able to match the banking and financial crises. Financial Crises and Time- Varying Risk Premia in a Small Open Economy: A Markov- Switching DSGE Model for Estonia 2013-09-10T17:34:00Z Abstract http://www.eestipank.ee/en/publication/working-papers/2013/82013-boris-blagov-financial-crises-and-time-varying-risk-premia-small-open-economy-markov-switching Full text http://www.eestipank.ee/sites/default/files/publication/en/WorkingPapers/2013/wp08_2013.pdf Boris Blagov Boris Blagov 2013-09-10 Bank of Estonia Working papers http://www.eestipank.ee/sites/default/files/publication/wp07_2013.pdf Bank of Estonia Working papers by Gertrud Errit, Lenno Uusküla Euro Area Monetary Policy Transmission in Estonia 2013-08-15T12:31:59Z   Euro Area Monetary Policy Transmission in Estonia 2013-08-15T12:31:59Z Abstract http://www.eestipank.ee/en/publication/working-papers/2013/72013-gertrud-errit-lenno-uuskula-euro-area-monetary-policy-transmission-estonia Full text http://www.eestipank.ee/sites/default/files/publication/wp07_2013.pdf Gertrud Errit Lenno Uusküla Gertrud Errit, Lenno Uusküla 2013-08-15 Bank of Estonia Working papers http://www.eestipank.ee/sites/default/files/publication/en/WorkingPapers/2013/wp06_2013.pdf Bank of Estonia Working papers by Merike Kukk, Karsten Staehr Income Underreporting by Households with Business Income. Evidence from Estonia 2013-07-25T17:50:59Z This paper estimates the extent of income underreporting by households with business income relative to households of wage earners in Estonia. The paper uses a modified version of the methodology pioneered by Pissarides and Weber (1989). The extent of income underreporting is estimated by comparing food Engel curves for households with and without business income. The baseline result is that the reported income of households with business income above 20% of total income must be multiplied by 2.6 in order to attain the same propensity of food consumption as households of wage earners. Households with business income above 0 but below 20% also underreport income, but to a lesser extent. The estimates are higher than those found for developed countries, but consistent with other studies of the shadow economy in transition countries. The analysis also shows that the presence of business income is a better indicator of income underreporting than a reported status of self-employment.  Income Underreporting by Households with Business Income. Evidence from Estonia 2013-07-25T17:50:59Z Abstract http://www.eestipank.ee/en/publication/working-papers/2013/62013-merike-kukk-karsten-staehr-income-underreporting-households-business-income-evidence-estonia Full text http://www.eestipank.ee/sites/default/files/publication/en/WorkingPapers/2013/wp06_2013.pdf Merike Kukk Karsten Staehr Merike Kukk, Karsten Staehr 2013-07-25 Bank of Estonia Working papers http://www.eestipank.ee/sites/default/files/publication/wp5_2013_kokku.pdf Bank of Estonia Working papers by Guido Baldi, Karsten Staehr The European Debt Crisis and Fiscal Reaction Functions in Europe 20002012 2013-06-28T12:33:59Z   The European Debt Crisis and Fiscal Reaction Functions in Europe 20002012 2013-06-28T12:33:59Z Abstract http://www.eestipank.ee/en/publication/working-papers/2013/52013-guido-baldi-karsten-staehr-european-debt-crisis-and-fiscal-reaction-functions-europe-2000-2012 Full text http://www.eestipank.ee/sites/default/files/publication/wp5_2013_kokku.pdf Guido Baldi Karsten Staehr Guido Baldi, Karsten Staehr 2013-06-28 Bank of Estonia Working papers http://www.eestipank.ee/sites/default/files/publication/en/WorkingPapers/2013/wp04_2013.pdf Bank of Estonia Working papers by Liina Malk Relaxation of Employment Protection and its Effects on Labour Reallocation 2013-06-03T18:03:00Z Flexibility of employment protection is considered to be essential for rapid adjustments in the workforce to changing economic conditions and for the reallocation of labour towards more productive activities. This was one of the main arguments for the new Employment Contracts Act in Estonia, which eased employment protection by reducing the costs of terminating employment relationships. Since such substantial changes in employment protection legislation (EPL) are quite rare, this reform provides a good chance to examine the outcomes of the relaxation of employment protection. This paper evaluates the effects of this institutional change on labour reallocation. Exploiting the microdata of the Labour Force Surveys for the years 20072011, we analyse worker flows and employ the difference in differences approach to identify the effects of the EPL reform, using Lithuanians as a control group for Estonians. Subsequent to the reform, labour flows out of and into employment increased in Estonia relative to Lithuania. However, from the regression analysis, a statistically significant impact of the EPL reform was identified only on the former of these two types of flows. Both the assessment of aggregate flows and the estimation of difference in differences effects for transition probabilities indicate that the reform of employment protection resulted in lower job-to-job flows while the overall effect on labour reallocation was positive. Relaxation of Employment Protection and its Effects on Labour Reallocation 2013-06-03T18:03:00Z Abstract http://www.eestipank.ee/en/publication/working-papers/2013/42013-liina-malk-relaxation-employment-protection-and-its-effects-labour-reallocation Full text http://www.eestipank.ee/sites/default/files/publication/en/WorkingPapers/2013/wp04_2013.pdf Liina Malk Liina Malk 2013-06-03 Bank of Estonia Working papers http://www.eestipank.ee/sites/default/files/publication/en/WorkingPapers/2013/wp01_2013.pdf Bank of Estonia Working papers by Ardo Hansson, Martti Randveer Economic Adjustment in the Baltic Countries 2013-05-31T13:04:59Z Estonia, Latvia and Lithuania stand out for their rapid economic adjustment after the outbreak of the global financial crisis. The reduction of imbalances and vulnerabilities in the Baltic countries has been much faster than that in the euro area countries most affected by the debt crisis. Our analysis seeks to explain these developments by addressing the following questions. First, what explains the recent cyclical pattern of the Baltic economies? Second, what are the similarities and differences between the economic adjustment in the Baltics and that in the euro area countries most affected by the recent debt crisis? And, finally, how successful has the strategy of adjustment been in the Baltic countries? We argue that the primary driving force of the cyclical developments in the Baltic economies has been the change in capital flows. A comparison of the economic adjustment in the Baltic countries with that in the three euro area countries strongly affected by the debt crisis Ireland, Greece and Portugal suggests that the main determinant of the speed of adjustment has been the ability of the countries to mitigate the impact of the sudden stop in private sector capital flows. Looking at the pros and cons of rapid and gradual adjustment, we conclude that in the case of the Baltic countries, the strategy of rapid adjustment has overall been a successful response to a very difficult situation. Economic Adjustment in the Baltic Countries 2013-05-31T13:04:59Z Abstract http://www.eestipank.ee/en/publication/working-papers/2013/12013-ardo-hansson-martti-randveer-economic-adjustment-baltic-countries Full text http://www.eestipank.ee/sites/default/files/publication/en/WorkingPapers/2013/wp01_2013.pdf Martti Randveer Ardo Hansson Ardo Hansson, Martti Randveer 2013-04-10 Bank of Estonia Working papers http://www.eestipank.ee/sites/default/files/publication/en/WorkingPapers/2013/wp02_2013_v2.pdf Bank of Estonia Working papers by Philip Du Caju, Theodora Kosma, Martina Lawless, Julián Messina, Tairi Rõõm Why Firms Avoid Cutting Wages: Survey Evidence from European Firms 2013-05-31T13:04:59Z The rarity with which firms reduce nominal wages has been frequently observed, even in the face of considerable negative economic shocks. This paper uses a unique survey of fourteen European countries to ask firms directly about the incidence of wage cuts and to assess the relevance of a range of potential reasons for why they avoid cutting wages. Concerns about the retention of productive staff and a lowering of morale and effort were reported as key reasons for downward wage rigidity across all countries and firm types. Restrictions created by collective bargaining were found to be an important consideration for firms in euro area countries but were one of the lowest ranked obstacles in non-euro area countries. The paper examines how firm characteristics and collective bargaining institutions affect the relevance of each of the common explanations put forward for the infrequency of wage cuts. Why Firms Avoid Cutting Wages: Survey Evidence from European Firms 2013-05-31T13:04:59Z Abstract http://www.eestipank.ee/en/publication/working-papers/2013/22013-philip-du-caju-theodora-kosma-martina-lawless-julian-messina-tairi-room-why-firms-avoid Full text http://www.eestipank.ee/sites/default/files/publication/en/WorkingPapers/2013/wp02_2013_v2.pdf Philip Du Caju Julián Messina Theodora Kosma Martina Lawless Tairi Rõõm Philip Du Caju, Theodora Kosma, Martina Lawless, Julián Messina, Tairi Rõõm 2013-05-06 Bank of Estonia Working papers http://www.eestipank.ee/sites/default/files/publication/en/WorkingPapers/2013/wp03_2013.pdf Bank of Estonia Working papers by Michael Ehrmann, Chiara Osbat, Jan Strasky, Lenno Uusküla The Euro Exchange Rate During the European Sovereign Debt Crisis Dancing to its Own Tune? 2013-05-31T13:04:59Z This paper studies the determinants of the euro exchange rate during the European sovereign debt crisis, allowing a role for macroeconomic fundamentals, policy actions and the public debate by policy makers. It finds that the euro exchange rate mainly danced to its own tune, with a particularly low explanatory power for macroeconomic fundamentals. Among the few factors that are found to have affected changes in exchanges rate levels are policy actions at the EU level and by the ECB. The findings of the paper also suggest that financial markets might have been less reactive to the public debate by policy makers than previously feared. Still, there are instances where exchange rate volatility was increasing in response to news, such as on days when several politicians from AAA-rated countries went public with negative statements, suggesting that communication by policy makers at times of crisis should be cautious about triggering undesirable financial market reactions. The Euro Exchange Rate During the European Sovereign Debt Crisis Dancing to its Own Tune? 2013-05-31T13:04:59Z Abstract http://www.eestipank.ee/en/publication/working-papers/2013/32013-michael-ehrmann-chiara-osbat-jan-strasky-lenno-uuskula-euro-exchange-rate-during-european Full text http://www.eestipank.ee/sites/default/files/publication/en/WorkingPapers/2013/wp03_2013.pdf Chiara Osbat Michael Ehrmann Jan Strasky Lenno Uusküla Michael Ehrmann, Chiara Osbat, Jan Strasky, Lenno Uusküla 2013-05-21 Bank of Estonia Working papers