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.

How do strategic mineral resources affect clean energy transition? Cross-sectional autoregressive distributed lag (CS-ARDL) approach

“…GDP is the log of the GDP measured in current US$ as an indicator of economic development. EXR is measure as real effective exchange rate index (2010 = 100) and EXR is calculated by dividing nominal effective exchange rate, which measures a currency's value against a weighted average of many foreign currencies, by a price deflator or cost index (Lenarčič and Ganesh 2020). Islam et al (2022a, b) reveal that the exchange rate devalued mineral import demands in the long run.…”