Did nominal exchange rate flexibility matter during the global recession? A Czech and Slovak case study

The policy brief analyzes the relative performance of the Czech and Slovak economies between the official confirmation of Slovakia's euro-area entry in mid-2008 and end- 2010.

The analysis suggests that both economies continued to evolve in a highly similar manner. Czech real exports, as well as manufacturing production and employment, performed somewhat better, especially during the peak of the crisis. However, Slovak and Czech export performance was basically identical in nominal euro terms. Moreover, Slovakia enjoyed a more stable local financial market situation and also benefited from looser monetary policy conditions in the euro area, which resulted in more favourable non-financial private sector credit developments.