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Working papers from the Economics Department of the OECD that cover the full range of the Department’s work including the economic situation, policy analysis and projections; fiscal policy, public expenditure and taxation; and structural issues including ageing, growth and productivity, migration, environment, human capital, housing, trade and investment, labour markets, regulatory reform, competition, health, and other issues.
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Slovakia: A Catching Up Euro Area Member In and Out of the Crisis
Cliquez pour accéder:
- Jarko Fidrmuc1, Caroline Klein2, Robert W.R. Price, Andreas Wörgötter2
- Author Affiliations
- 1: Zeppelin University, Germany
- 2: OECD, France
- 05 fév 2013
- Bibliographic information
The Slovak economy experienced a strong but short recession in 2009. The recovery afterwards was driven by exports and investment. While GDP growth was one of the strongest in OECD, employment did not reach the pre-crisis level and unemployment remains stubbornly high. This paper argues that Slovakia joined the euro area after a period of unprecedented real appreciation, which generated a threat for competitiveness of its export-oriented manufacturing industry. The response combined internal devaluation with productivity increasing measures, including capital deepening and laying off low productivity workers. While this strategy was successfully restoring an external equilibrium, its consequences for domestic demand and employment are less positive. This development is compared with Estonia and Slovenia, two other small and very open economies, recently entering the euro area.
- job-less recovery, domestic demand, crisis, Slovakia, Slovenia, Estonia
- Classification JEL:
- E20: Macroeconomics and Monetary Economics / Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy / General
- F41: International Economics / Macroeconomic Aspects of International Trade and Finance / Open Economy Macroeconomics
- G01: Financial Economics / General / Financial Crises