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Real Exchange Rates and Competitiveness: A Clarification of Concepts, and Some Measurements for Europe

Author

Listed:
  • Mr. Leslie Lipschitz
  • Mr. Donogh McDonald

Abstract

This paper examines indicators of competitiveness. It analyzes the conceptual foundations of conventional measures of the real exchange rate and finds that inferences about competitiveness from these indicators require strong, and in many cases implausible, assumptions. Based on this analysis some alternative measures are proposed and their use is illustrated using data from Europe. Given the usefulness of standardized indicators, four simple charts are proposed; these help solve some conundrums in the European data and provide the basis for a richer set of inferences about competitiveness.

Suggested Citation

  • Mr. Leslie Lipschitz & Mr. Donogh McDonald, 1991. "Real Exchange Rates and Competitiveness: A Clarification of Concepts, and Some Measurements for Europe," IMF Working Papers 1991/025, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:1991/025
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    Citations

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    Cited by:

    1. Catao, Luis & Falcetti, Elisabetta, 2002. "Determinants of Argentina’s External Trade," Journal of Applied Economics, Universidad del CEMA, vol. 5(1), pages 1-39, May.
    2. Luis Rubalcaba & Gisela di Meglio & Stefano Visintin & Andrés Maroto & Jorge Gallego, 2008. "The Competitiveness of European Services," Working Papers 01/08, Instituto Universitario de Análisis Económico y Social.
    3. International Monetary Fund, 2004. "South Africa: Selected Issues," IMF Staff Country Reports 2004/379, International Monetary Fund.
    4. Ondrej Schneider & Jan Zapal, 2006. "Fiscal Policy in New EU Member States: Go East, Prudent Man!," Post-Communist Economies, Taylor & Francis Journals, vol. 18(2), pages 139-166.
    5. Ingrid Majerová & Jan Nevima, 2015. "Exploring regional aspects of competitiveness in the selected countries of Visegrad Group Plus," Working Papers 0017, Silesian University, School of Business Administration.
    6. Andrea Saayman, 2007. "The Real Equilibrium South African Rand/US Dollar Exchange Rate: A Comparison of Alternative Measures," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 13(2), pages 183-199, May.
    7. Eckhard Siggel, 2006. "International Competitiveness and Comparative Advantage: A Survey and a Proposal for Measurement," Journal of Industry, Competition and Trade, Springer, vol. 6(2), pages 137-159, June.
    8. Crt Lenarcic & Sowmya Gayathri Ganesh, 2020. "Calculation Methodology of the Effective Exchange Rate in Slovenia," Journal of Innovative Business and Management, DOBA Faculty, vol. 12(2), pages 20-37.
    9. Horvath, Roman & Komarek, Lubos, 2006. "Equilibrium Exchange Rates in EU New Members: Applicable for Setting the ERM II Central Parity?," MPRA Paper 1180, University Library of Munich, Germany.
    10. Dominique Peters, 2010. "Price Competitiveness in Central and Eastern Europe - a case study for transition economies," IMK Studies 01-2010, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
    11. International Monetary Fund, 2002. "Tunisia’s Experience with Real Exchange Rate Targeting and the Transition to a Flexible Exchange Rate Regime," IMF Working Papers 2002/190, International Monetary Fund.
    12. Gaulier, Guillaume & Santoni, Gianluca & Taglioni, Daria & Zignago, Soledad, 2013. "In the wake of the global crisis : evidence from a new quarterly database of export competitiveness," Policy Research Working Paper Series 6733, The World Bank.
    13. Jaime R. Marquez, 1992. "Real exchange rates: measurement and implications for predicting U.S. external imbalances," International Finance Discussion Papers 427, Board of Governors of the Federal Reserve System (U.S.).
    14. Ingrid Majerová & Jan Nevima, 2018. "Influence of National Competitiveness Indicators on the Export Performance of the Visegrad Group Plus Countries," DANUBE: Law and Economics Review, European Association Comenius - EACO, issue 1, pages 19-36, March.
    15. Ulf Schoefisch, 1992. "Measures of external and internal competitiveness," Reserve Bank of New Zealand Bulletin, Reserve Bank of New Zealand, vol. 55, march.
    16. Mr. Charalambos G Tsangarides & Mr. Gustavo Ramirez, 2007. "Competitiveness in the CFA Franc Zone," IMF Working Papers 2007/212, International Monetary Fund.
    17. Stephan Mumenthaler & Barbara von Schnurbein, 2016. "The stickiness of national competitiveness: Implications for Switzerland and beyond," Aussenwirtschaft, University of St. Gallen, School of Economics and Political Science, Swiss Institute for International Economics and Applied Economics Research, vol. 67(01), pages 27-43, February.
    18. Roman Horváth, 2005. "Real Equilibrium Exchange Rate Estimates: To What Extent Are They Applicable for Setting the Central Parity?," Working Papers IES 75, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised 2005.
    19. Mr. Luc Eyraud, 2009. "Madagascar: A Competitiveness and Exchange Rate Assessment," IMF Working Papers 2009/107, International Monetary Fund.
    20. Mr. Claudio A Paiva, 2006. "External Adjustment and Equilibrium Exchange Rate in Brazil," IMF Working Papers 2006/221, International Monetary Fund.
    21. International Monetary Fund, 2009. "Republic of Congo: Selected Issues," IMF Staff Country Reports 2009/072, International Monetary Fund.
    22. Goce Petreski & Olivera Kostoska, 2009. "Modeling the determinants of exports and imports: assessment of the Macedonian competitive performances," Management and Marketing Journal, University of Craiova, Faculty of Economics and Business Administration, vol. 0(1), pages 36-58, November.
    23. Ben Naceur, Sami & Bakardzhieva, Damyana & Kamar, Bassem, 2012. "Disaggregated Capital Flows and Developing Countries’ Competitiveness," World Development, Elsevier, vol. 40(2), pages 223-237.
    24. Ms. Elena Loukoianova & Mr. Plamen K Iossifov, 2007. "Estimation of a Behavioral Equilibrium Exchange Rate Model for Ghana," IMF Working Papers 2007/155, International Monetary Fund.
    25. repec:kap:iaecre:v:13:y:2007:i:2:p:183-199 is not listed on IDEAS

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