Calculation Methodology of the Effective Exchange Rate in Slovenia

  • Črt Lenarčič Consultant Analyst in the Financial Stability and Macroprudential Policy (FSM), Bank of Slovenia, Slovenska cesta 35, 1505 Ljubljana, Slovenia
  • Sowmya Gayathri Ganesh Johns Hopkins University, School of Advanced International Studies (SAIS), 1740 Massachusetts Ave NW, Washington, DC 20036, USA
Keywords: real effective exchange rate, nominal effective exchange rate, trade weights, consumer prices, producer prices, unit labour cost

Abstract

The paper sets up a calculation of the effective exchange rate for Slovenia, and compares it to the methodologies used by the IMF, BIS, European Commission and ECB. Additionally we construct smaller regional effective exchange rates that help to explain the robustness of the Slovene export sector, especially in the cooling-off period of the global economy in recent years. The results show that some of the calculation methodologies can overshoot less favourable competitiveness dynamics. It is important to consider these results as different methodologies could draw different policy conclusions for the competitiveness stance of the Slovene economy.

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Published
2020-11-03
How to Cite
Lenarčič, Črt and Gayathri Ganesh, S. (2020) “Calculation Methodology of the Effective Exchange Rate in Slovenia”, Mednarodno inovativno poslovanje = Journal of Innovative Business and Management, 12(2), pp. 20-37. doi: 10.32015/JIBM.2020.12.2.1.3.20-37.
Section
Original article