From the ruble zone to the euro zone: the political economy of Estonian macroeconomic policy

This article analyzes Estonian macroeconomic policy since the country regained independence in 1991. Estonia was the first post-communist country to introduce a currency board in 1992, and consecutive governments have systematically prioritized macroeconomic stability and fiscal prudence. Estonia implemented an internal devaluation in 2008–2009, which enabled it to become the first post-Soviet republic to adopt the euro in 2011. This article explores the origins of the currency board and shows how institutions, interests, and ideas have contributed to Estonian exceptionalism in macroeconomic policy and to euro adoption. It demonstrates that the Estonian experience can shed light on the political prerequisites of internal devaluations, which may be of great relevance both to current and future Central and Eastern European euro area members.