U.K. Exports of Manufacturers: Testing for the Effects of Non-price Competitiveness Using Stochastic Trends and Profitability Measures
This paper investigates claims that the underlying performance of U.K. exports of manufactures has improved in the 1980s. Secular movements in U.K. nonprice competitiveness are modeled using a stochastic trend, whereas shorter-term fluctuations in U.K. nonprice competitiveness are proxied by various measures of export profitability. Empirical estimates show that, although profitability may explain some of the recent improvement in manufacturing exports, the major improvement has been the gradual reversal of the underlying secular deterioration in U.K. nonprice competitiveness. Modeling U.K. nonprice competitiveness by this method also implies that export price competitiveness elasticities are lower, and demand elasticities are higher, than previous estimates suggest. Copyright 1992 by Blackwell Publishers Ltd and The Victoria University of Manchester
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Volume (Year): 60 (1992)
Issue (Month): 1 (March)
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