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Calculation methodology of the effective exchange rate in Slovenia

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  • Lenarčič, Črt
  • Ganesh, Sowmya Gayathri

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.

Suggested Citation

  • Lenarčič, Črt & Ganesh, Sowmya Gayathri, 2020. "Calculation methodology of the effective exchange rate in Slovenia," MPRA Paper 100645, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:100645
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    References listed on IDEAS

    as
    1. Marc Klau & San Sau Fung, 2006. "The new BIS effective exchange rate indices," BIS Quarterly Review, Bank for International Settlements, March.
    2. International Monetary Fund, 2005. "New Rates from New Weights," IMF Working Papers 2005/099, International Monetary Fund.
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    4. Edwards, Sebastian, 1989. "Exchange Rate Misalignment in Developing Countries," The World Bank Research Observer, World Bank, vol. 4(1), pages 3-21, January.
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    7. Ian W. Marsh & Mr. Stephen Tokarick, 1994. "Competitiveness Indicators: A Theoretical and Empirical Assessment," IMF Working Papers 1994/029, International Monetary Fund.
    8. Erlat, Güzin & Arslaner, Ferhat, 1997. "Measuring Annual Real Exchange Rates: Series for Turkey," MPRA Paper 45996, University Library of Munich, Germany.
    9. Luca Buldorini & Stelios Makrydakis & Christian Thimann, 2002. "The effective exchange rates of the euro," Occasional Paper Series 02, European Central Bank.
    10. Bela Balassa, 1964. "The Purchasing-Power Parity Doctrine: A Reappraisal," Journal of Political Economy, University of Chicago Press, vol. 72(6), pages 584-584.
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    real effective exchange rate; nominal effective exchange rate; trade weights; consumer prices; producer prices; unit labour cost;
    All these keywords.

    JEL classification:

    • C10 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - General
    • C18 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Methodolical Issues: General
    • F10 - International Economics - - Trade - - - General
    • F31 - International Economics - - International Finance - - - Foreign Exchange

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