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Maintaining competitiveness under equilibrium real appreciation: The case of Slovakia

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  • Oomes, Nienke

Abstract

This paper evaluates competitiveness in Slovakia and estimates the equilibrium real exchange rate for the koruna. Slovak wages and prices are found to have been relatively low even when adjusted for differences in relative income and productivity, suggesting an undervalued real exchange rate. However, recent rapid nominal appreciation has reduced most or all of this undervaluation and has brought the real exchange rate near or above equilibrium. The productivity-driven equilibrium real appreciation rate during 2005?09 is estimated at close to 3 percent per year but can be lower with the help of fiscal consolidation.

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Bibliographic Info

Article provided by Elsevier in its journal Economic Systems.

Volume (Year): 29 (2005)
Issue (Month): 2 (June)
Pages: 187-204

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Handle: RePEc:eee:ecosys:v:29:y:2005:i:2:p:187-204

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Citations

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Cited by:
  1. Shuang Ding & Omar Al Shehabi, 2008. "Estimating Equilibrium Exchange Rates for Armenia and Georgia," IMF Working Papers 08/110, International Monetary Fund.
  2. Jarko Fidrmuc & Andreas Wörgötter, 2013. "Slovakia: The Consequences of Joining the Euro Aea before the Crisis for a Small Catching-up Economy," CESifo Forum, Ifo Institute for Economic Research at the University of Munich, vol. 14(1), pages 57-63, 05.
  3. Oomes , Nienke & Kalcheva, Katerina, 2007. "Diagnosing Dutch disease: Does Russia have the symptoms?," BOFIT Discussion Papers 7/2007, Bank of Finland, Institute for Economies in Transition.
  4. García Solanes José, 2008. "Real Exchange Rate Appreciation in Central and Eastern European Countries. Why the Balassa-Samuelson Effect Does Not Explain the Whole Story," Working Papers 2010100, Fundacion BBVA / BBVA Foundation.
  5. Égert, Balázs & Halpern, László & MacDonald, Ronald, 2004. "Equilibrium Exchange Rates in Transition Economies: Taking Stock of the Issues," CEPR Discussion Papers 4809, C.E.P.R. Discussion Papers.
  6. Ibarra, Carlos A., 2011. "Import elasticities and the external constraint in Mexico," Economic Systems, Elsevier, vol. 35(3), pages 363-377, September.
  7. Benkovskis, Konstantins & Wörz, Julia, 2012. "Non-price competitiveness of exports from emerging countries," BOFIT Discussion Papers 19/2012, Bank of Finland, Institute for Economies in Transition.
  8. Jarko Fidrmuc & Caroline Klein & Robert W.R. Price & Andreas Wörgötter, 2013. "Slovakia: A Catching Up Euro Area Member In and Out of the Crisis," OECD Economics Department Working Papers 1019, OECD Publishing.

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