But do you remember the weeks of protests in the early 1980s, when the first Lubbers cabinet cut public sector pay? When trash was piled high in the street? Cutting monthly income simply causes practical problems, and that applies just as much to Italians as it does to the Dutch.
In the case of Switzerland and Japan, compared with January 2000, the nominal effective exchange rates in August 2012 were 41.4 percent and 17.4 percent higher, respectively (Chart 4). Secondly, we also need to consider the fact that higher inflation will erode competitiveness. In other words, further information could be derived from the real exchange rate, which is the nominal rate adjusted for inflation.