...European Central Bank Mario Draghi has argued that the formation of EU-wide value chains has “blunted the short-run benefits of competitive devaluations.” When a country’s exports contain a large share of imported inputs, it’s not clear if much can be gained by driving down the exchange rate.
...During the global economic crises, neighboring countries’ floating currencies depreciated by about 30 percentagainst the euro-pegged Slovak koruna, but their economic performance was no better than Slovakia’s.
The Czech Republic set a lower bound for the Czech koruna’s exchange rate to the euro for three and a half years before abandoning it in 2017. Since then, the koruna has appreciated by about 5.7 percent. It’s not clear what kind of economic advantage the country gained from it beyond a slight tempering of inflation; it’s certainly not led to a competitiveness improvement.
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