AbstractWith global supply chains, any value added or production task can be traded as part of goods. This means that competitiveness can be measured either in terms of “tasks” (Bems and Johnson, 2012), or goods, but with goods prices reflecting the cost of tasks embedded in those goods. We show that when measuring competitiveness in goods, the formula used in computing the real effective exchange rates at the IMF (Bayoumi, Lee, and Jayanthi, 2005) needs to be expressed in terms of the price of value added and needs an additional term, which captures a gain or loss in competitiveness of goods due to outsourcing.
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Bibliographic InfoPaper provided by International Monetary Fund in its series IMF Working Papers with number 13/100.
Date of creation: 08 May 2013
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This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-09-26 (All new papers)
- NEP-CSE-2013-09-26 (Economics of Strategic Management)
- NEP-CWA-2013-09-26 (Central & Western Asia)
- NEP-INT-2013-09-26 (International Trade)
- NEP-OPM-2013-09-26 (Open Economy Macroeconomics)
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- Robert Koopman & William Powers & Zhi Wang & Shang-Jin Wei, 2010.
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NBER Working Papers
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- Campbell, Douglas L & Pyun, Ju Hyun, 2014. "Through the Looking Glass: A WARPed View of Real Exchange Rate History," MPRA Paper 55870, University Library of Munich, Germany.
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