Calculation Methodology of the Effective Exchange Rate in Slovenia

Abstract

The paper sets up a calculation of the effective exchange rate for Slovenia andcompares 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 periodof 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.

Keywords

• real effective exchange rate
• nominal effective exchange rate
• trade weights
• consumer prices
• producer prices
• unit labour cost