Autumn’s Key Economic Themes

As SCCE and FECC gathered for our joint Business Seminar on the economy Thursday 23 November, we learned two things: “The current economic upturn reminiscent of the two episodes of global growth reacceleration in 2010 and 2014” and “You might very well be awarded the Nobel Prize in Economy even if nothing much is expected of you and you are considered to waste a promising career on trivialities.”

– Sweden’s GDP growth is still going strong and the Finnish economy has bottomed out as its GDP is increasing, said Tiina Helenius, Chief Economist at Svenska Handelsbanken Capital Markets in Finland.

– However, Estonia’s competitive edge is shrinking as the real average monthly gross wages are increasing while its manufacturing output is decreasing, continued Tiina.

– In the European Economic Monetary Union, domestic demand is the engine of growth and there are currently excellent conditions for growth and investments with supportive financial conditions in the next 6 to 8 months.

– China is the key link to the global industrial and commodity cycle. However, Chinese data suggest that its economy is rolling over a bit more slowly than expected.

– Our conclusion is that the current economic upturn reminiscent of the two episodes of global growth reacceleration in 2010 and 2014, concluded Tiina Helenius.

Headlined “Is Homo Economicus human after all?” Karsten Staehr, Professor in International and Public Finance at Tallinn University of Technology and Research Advisor at Eesti Pank, introduced us to Richard Thaler, this year’s Nobel Prize Laureate in Economics.

– Traditional economists love Homo Economicus since this individual is always rational, optimising and has full account of all available information, including information far into the future. All of this of course useful when making predictions, said Karsten.

– However, Richard Thaler argues that people do not behave like that in reality and thus he further developed behavioural economics, for example consumer behaviour and behavioural finance, by putting psychology into economics.

– Richard Thaler is well-known among economists around the world, including Estonia where several studies of behavioural economics have been published.

– As for Richard Thaler’s background Sherwin Rosen, his academic dissertation supervisor, has said: “We did not expect much of him…he wasted a promising career on trivialities.”

– However, the award of the Nobel Prize to Richard Thaler is well deserved. It goes to an economist who has been thinking outside the box throughout his career and has raised fundamental questions about how human beings behave in an economic context, concluded Karsten Staehr.

Tiina Helenius’s and Karsten Staehr’s presentations are available on the links below.

Tiina Helenius
Karsten Staehr