According to Business Week, as the US was embarking on a US$787bn stimulus package in 2009 Estonian authorities decided to march in the opposite direction and avoided running budget deficits and borrowing money to try and trigger higher growth levels. In order to maintain a balanced budget the government employed a contractionary fiscal policy and did the following:
– they froze state pensions
– lowered salaries by 10%
– raised the tax on goods and services by 2%
As a result of this:
– GDP in Estonia fell by 14% in 2009
– Unemployment in rose to 16%
Estonia – 2011
GDP grew by 7.5% and unemployment down to 10.8% which is still worrying but not as bad as Spain or Greece. However, Estonia has shown that a contractionary monetary and fiscal stance by government does lead to economic hardship but does in the long run generate growth. The IMF…
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Utopia, you are standing in it! 
Jan 16, 2017 @ 16:59:40
This blindingly ignorant person believes a country that deliberately engineered a DEPRESSION is a success story. Only in the era of trump!
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