Narrow Your Choices

Refine By Topic

Refine By Series

Refine By Language

Refine By Date

—

Refine By IMF Taxonomy

Refine By JEL Taxonomy

Refine by LOC Taxonomy

Refine By THEMA Taxonomy

  • Print
  • Save

Europe > Latvia, Republic of

You are looking at 1 - 2 of 2 items for :

  • Type: Journal Issue x
  • Labor costs x
Clear All Modify Search
Cover IMF Working Papers
Progress Towards External Adjustment in the Euro Area Periphery and the Baltics
Mr. Joong S Kang
and
Mr. Jay C Shambaugh
The euro area periphery countries and the Baltic countries, which had large current account deficits in the run-up to the crisis, needed adjustment of relative prices to achieve both internal and external balances. Thus far, tangible progress has been made through lower wages and/or higher productivity relative to trading partners (“internal devaluation”), which contributed to narrowing current account deficits and shifting output towards the tradables sector. While some early adjusters cut wages more rapidly followed by productivity improvement, others have only slowly improved productivity largely through labor shedding. This adjustment for most countries has come along with a substantial recession as the unit labor cost improvement has largely come from falling employment and much of the current account improvement from import compression. Going forward, these countries still need to generate growing tradables sector employment and to continue adjustment to prevent imbalances from returning as output gaps close.
Keywords:
WP; IMF staff calculation; current account; cost; Current account deficit; Internal devaluation; Competitiveness; Unit labor cost; output recovery; private sector; labor shedding; ULC peak; Labor costs; Wages; Employment; Current account deficits; Productivity; Baltics; Global
Cover The Baltics
The Baltics
Competitiveness on the Eve of EU Accession
Mr. Yuan Xiao
,
Mr. Robert M Burgess
, and
Ms. Stefania Fabrizio

Abstract

Large current account deficits in Estonia and Latvia, and the continued real appreciation of the exchange rate in Lithuania, have prompted concerns about the competitiveness of the Baltic economies, and called into question the sustainability of their current fixed exchange rate arrangements. Recent external performance, however, appears to be explained more by temporary or cyclical developments than by a deterioration in the underlying competitive position of the Baltic economies. This book assesses the competitive position of the Baltic countries and focuses, in particular, on the viability of the countries’ strategy of maintaining their fixed exchange rates on joining the European Union, participating in its exchange rate mechanism, and then adopting the euro at the earliest possible date.

Keywords:
ISI; SI; exchange rate; productivity convergence; total factor productivity; EU accession; A. labor productivity; productivity performance; ERM II fluctuation band; Real exchange rates; Exchange rates; Productivity; Real effective exchange rates; Inflation; Baltics; Purchasing power parity