Maintaining Competitiveness Under Equilibrium Real Appreciation: The Case of Slovakia

 
Author/Editor: Oomes, Nienke
 
Publication Date: March 01, 2005
 
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Disclaimer: This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate
 
Summary: 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.
 
Series: Working Paper No. 05/65
Subject(s): Prices | Slovak Republic | Real effective exchange rates | Wages

Author's Keyword(s): Real exchange rate | competitiveness | Balassa-Samuelson | Slovakia
 
English
Publication Date: March 01, 2005
ISBN/ISSN: 1934-7073 Format: Paper
Stock No: WPIEA2005065 Pages: 29
Price:
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