ABSTRACT
It is commonly understood that the determinants of competitiveness are varied and complex, and spring from micro, macro and institutional levels, as also from the monetary and the real side of the economy. A key link between micro and macro, and also between real and financial is the exchange rate. Exchange rates link macroeconomic policies and exogenous events to sector and firm level outcomes; they link financial developments to output and employment; they alter international goods and financial flows and in turn are altered by these flows.
