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Measuring Competitiveness

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  • J. Peter Neary

Abstract

This paper reviews alternative approaches to measuring an economy''s cost competitiveness and proposes some new measures inspired by the economic theory of index numbers. The indices provide a theoretical benchmark for estimated real effective exchange rates, but differ from standard measures in that they are based on marginal rather than average sectoral shares in GDP or employment. The use of the new indices is illustrated by some simple calculations that highlight the potential exposure of the Irish economy to fluctuations in the euro-sterling exchange rate.

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Bibliographic Info

Paper provided by International Monetary Fund in its series IMF Working Papers with number 06/209.

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Length: 21
Date of creation: 01 Sep 2006
Date of revision:
Handle: RePEc:imf:imfwpa:06/209

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Keywords: Export competitiveness; competitiveness; exchange rates; exchange rate; effective exchange rates; nominal exchange rate; real effective exchange rate; real effective exchange rates; effective exchange rate; real exchange rate; multilateral exchange rate; exchange rate dynamics; bilateral exchange rates;

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References

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  1. J. Peter Neary, 2003. "Competitive versus Comparative Advantage," The World Economy, Wiley Blackwell, Wiley Blackwell, vol. 26(4), pages 457-470, 04.
  2. J. Peter Neary, 1996. "Rationalising the Penn World Table - True Multilateral Indices for International Comparisons of real Income," Working Papers, School Of Economics, University College Dublin 199622, School Of Economics, University College Dublin.
  3. Richard W. Blundell & Martin Browning & Ian A. Crawford, 2003. "Nonparametric Engel Curves and Revealed Preference," Econometrica, Econometric Society, Econometric Society, vol. 71(1), pages 205-240, January.
  4. Valerie Cerra & Jarkko Soikkeli, 2002. "How Competitive is Irish Manufacturing?," IMF Working Papers 02/160, International Monetary Fund.
  5. Menzie Chinn, 2006. "A Primer on Real Effective Exchange Rates: Determinants, Overvaluation, Trade Flows and Competitive Devaluation," Open Economies Review, Springer, Springer, vol. 17(1), pages 115-143, January.
  6. Cassidy, Mark & O'Brien, Derry, 2005. "Export Performance and Competitiveness of the Irish Economy," Quarterly Bulletin Articles, Central Bank of Ireland, pages 75-95, July.
  7. Obstfeld, Maurice & Rogoff, Kenneth S., 1995. "Exchange Rate Dynamics Redux," Scholarly Articles 12491026, Harvard University Department of Economics.
  8. Lane, Philip R., 2001. "The new open economy macroeconomics: a survey," Journal of International Economics, Elsevier, Elsevier, vol. 54(2), pages 235-266, August.
  9. Barry, F, 1997. "Dangers for Ireland of and EMU without the UK : Some Calibration Results," Papers, College Dublin, Department of Political Economy- 97/20, College Dublin, Department of Political Economy-.
  10. Walsh, Brendan, 2000. "Cyclical and Structural Influences on Irish Unemployment," Oxford Economic Papers, Oxford University Press, vol. 52(1), pages 119-45, January.
  11. Neary, J Peter, 1987. "Determinants of the Equilibrium Real Exchange Rate," CEPR Discussion Papers, C.E.P.R. Discussion Papers 209, C.E.P.R. Discussion Papers.
  12. Ian Marsh & Stephen Tokarick, 1996. "An assessment of three measures of competitiveness," Review of World Economics (Weltwirtschaftliches Archiv), Springer, Springer, vol. 132(4), pages 700-722, December.
  13. Anderson, James E & Neary, J Peter, 1992. "A New Approach to Evaluating Trade Policy," CEPR Discussion Papers, C.E.P.R. Discussion Papers 683, C.E.P.R. Discussion Papers.
  14. Baker, Terence J. & FitzGerald, John & Honohan, Patrick, 1996. "Economic Implications for Ireland of EMU," Research Series, Economic and Social Research Institute (ESRI), Economic and Social Research Institute (ESRI), number PRS28.
  15. Neary, J Peter, 1985. "International Factor Mobility, Minimum Wage Rates, and Factor-Price Equalization: A Synthesis," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 100(3), pages 551-70, August.
  16. Patrick Honohan & Brendan Walsh, 2002. "Catching Up with the Leaders: The Irish Hare," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 33(1), pages 1-78.
  17. Neary, J.P. & Thom, D.R., 1996. "Punts, Pounds and Euros: In Search of an Optimum Currency Area," Papers, College Dublin, Department of Political Economy- 96/24, College Dublin, Department of Political Economy-.
  18. James E. Anderson & J. Peter Neary, 2005. "Measuring the Restrictiveness of International Trade Policy," MIT Press Books, The MIT Press, The MIT Press, edition 1, volume 1, number 0262012200, December.
  19. 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, Royal Economic Society, vol. 111(468), pages 128-62, January.
  20. International Monetary Fund, 2005. "New Rates From New Weights," IMF Working Papers 05/99, International Monetary Fund.
  21. Rudolf R. Rhomberg, 1976. "Indices of Effective Exchange Rates (Indices de taux de change effectifs) (Indices de tipos de cambio efectivos)," IMF Staff Papers, Palgrave Macmillan, vol. 23(1), pages 88-112, March.
  22. Diewert, W. E., 1976. "Exact and superlative index numbers," Journal of Econometrics, Elsevier, Elsevier, vol. 4(2), pages 115-145, May.
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Citations

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Cited by:
  1. Angela Cheptea & Lionel Fontagné & Soledad Zignago, 2014. "European export performance," Review of World Economics (Weltwirtschaftliches Archiv), Springer, Springer, vol. 150(1), pages 25-58, February.
  2. Bogdan Lissovolik & Julio Escolano & Stefania Fabrizio & Werner Schule & Herman Z. Bennett & Stephen Tokarick & Yuan Xiao & Marialuz Moreno Badia & Eva Gutierrez & Iryna V. Ivaschenko, 2008. "Competitiveness in the Southern Euro Area," IMF Working Papers 08/112, International Monetary Fund.
  3. Herman Z Bennett & Ziga Zarnic, 2009. "International Competitiveness of the Mediterranean Quartet: A Heterogeneous-Product Approach," IMF Staff Papers, Palgrave Macmillan, vol. 56(4), pages 919-957, November.
  4. Jules Leichter & Cristina Mocci & Stefania Pozzuoli, . "Measuring External Competitiveness:An Overview," Working Papers, Department of the Treasury, Ministry of the Economy and of Finance 2, Department of the Treasury, Ministry of the Economy and of Finance.
  5. Arvis, Jean-Francois, 2013. "How many dimensions do we trade in ? product space geometry and latent comparative advantage," Policy Research Working Paper Series 6478, The World Bank.
  6. Angela Cheptea & Lionel Fontagné & Soledad Zignago, 2014. "European Export Performance," Post-Print, HAL hal-00975534, HAL.

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