Maintaining Competitiveness Under Equilibrium Real Appreciation: The Case of Slovakia

March 1, 2005

Preview Citation

Format: Chicago

Nienke Oomes. Maintaining Competitiveness Under Equilibrium Real Appreciation: The Case of Slovakia, (USA: International Monetary Fund, 2005) accessed November 21, 2024

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.

Subject: Government consumption, Price controls, Productivity, Real exchange rates, Wages

Keywords: Appreciation, Productivity growth, Slovakia, WP

Publication Details

Pages:

29
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2005/065
Stock No:

WPIEA2005065
ISBN:

9781451860849
ISSN:

1018-5941

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