An Export-Based Measure of Competitiveness
AbstractUnit labor cost (ULC) developments have been receiving increased attention from policymakers throughout the euro area, as adverse developments in price competitiveness are commonly seen as one of the causes of the ongoing sovereign debt crisis in the euro area. Yet empirical results are often ambiguous on the link between ULC developments and export performance. This widely examined empirical conundrum, often referred to as “Kaldor paradox,” naturally raises the question whether commonly used measures of ULC growth (such as total economy ULC) are a meaningful measure of mounting imbalances and persistent losses of trade competitiveness. Therefore, we propose a new ULC growth index that exploits disaggregated sectoral information and focuses on export-relevant sectors only. This trade-weighted ULC index is shown to have a substantially higher explanatory power for export growth than traditional ULC measures.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by Oesterreichische Nationalbank (Austrian Central Bank) in its journal Monetary Policy & the Economy.
Volume (Year): (2013)
Issue (Month): 2 ()
Postal: Oesterreichische Nationalbank, Documentation Management and Communications Services, Otto-Wagner Platz 3, A-1090 Vienna, Austria
Find related papers by JEL classification:
- F14 - International Economics - - Trade - - - Empirical Studies of Trade
- J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Zsolt Darvas, 2012. "Compositional effects on productivity, labour cost and export adjustments," Policy Contributions 730, Bruegel.
- Wendy Carlin & Andrew Glyn & John Van Reenen, 1999.
"Export Market Performance of OECD countries: an empirical examination of the role of cost competitiveness,"
IFS Working Papers
W99/22, Institute for Fiscal Studies.
- Carlin, Wendy & Glyn, Andrew & Van Reenen, John, 2001. "Export Market Performance of OECD Countries: An Empirical Examination of the Role of Cost Competitiveness," Economic Journal, Royal Economic Society, vol. 111(468), pages 128-62, January.
- Ferrucci, Gianluigi & Jiménez-Rodríguez, Rebeca & Onorante, Luca, 2010. "Food price pass-through in the euro area The role of asymmetries and non-linearities," Working Paper Series 1168, European Central Bank.
- Andrés Maroto Sanchez & Luis Rubalcaba Bermejo, 2006. "Competitiveness and the Kaldor Paradox: The case of Spanish Service Sector," Working Papers 06/06, Instituto Universitario de Análisis Económico y Social.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Claudia Kwapil).
If references are entirely missing, you can add them using this form.