engleski

The international economic flow arguments for exchange rate policy in Slovenia

The Association Agreement and official request for the full membership of the EU represent the framework for the judgement on the importance of the Euro for the Slovene economy. Extensive business co-operation with partners from the Euro area at the present stage lead to the use of the Euro predominantly on the level of business documentation. Results of the questionnaire on the use of the Euro in Slovene enterprises pointed out great differences in planning and extent in the use of the Euro among businesses. Continuous deterioration in the value of the Euro vis-a-vis American dollar and at the same time rising importance of the Euro in the business practice of the EU member countries raise different practical questions for transition countries and businesses. Some reasonable doubts arise regarding the expedience of broader and systematic future use of the Euro in business transactions and eventual pegging of national currencies to the Euro. The main objective of the paper is to examine possible impacts of Euro exchange rate policy on the accessing countries and to indicate the required economic policy changes in the process of accession to the EU. The dilemmas of proper exchange rate policy in the accessing countries will be evaluated on the basis of trade and capital flow analysis among accessing and EU member countries. Financial links reflecting capital flows and trade links carry important implications for accessing countries and their policies. The identification of capital flow pattern among transition and EU countries especially of FDI flows will provide additional indication of economic convergence. At latest on the date of accession candidate countries will have to fulfil the legal and institutional requirements in the area of EMU including complete liberalisation of capital flows. The question is to what extent will the capital account liberalisation stimulate capital flows and how will capital liberalisation affect trade flows. In this regard the interactions between trade in goods and capital movements among accessing and EU member countries will be analysed.

exchange rate policy; exchange rate volatility; FDI; trade flows; gravity model; panel data; Slovenia

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