Calculation Methodology of the Effective Exchange Rate in Slovenia
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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