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A consistent set of multilateral productivity approach-based indicators of price competitiveness – Results for Pacific Rim economies

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  • Fischer, Christoph
  • Hossfeld, Oliver

Abstract

We propose a novel, multilaterally consistent productivity approach-based indicator to assess the international price competitiveness of 57 industrialized and emerging economies. It is designed to be a useful assessment tool for monetary policy authorities and, thereby, differs from previously proposed indicators, which are hardly applicable on a day-to-day basis. Special attention has been paid to an appropriate selection of price and productivity data in levels as opposed to indices, and to the treatment of country fixed effects when interpreting currency misalignments. The discussion of the results focuses on Pacific Rim economies. At the current juncture, and in contrast to the prevailing view, we find US price competitiveness to be above and China's price competitiveness to be below its derived benchmark.

Suggested Citation

  • Fischer, Christoph & Hossfeld, Oliver, 2014. "A consistent set of multilateral productivity approach-based indicators of price competitiveness – Results for Pacific Rim economies," Journal of International Money and Finance, Elsevier, vol. 49(PA), pages 152-169.
  • Handle: RePEc:eee:jimfin:v:49:y:2014:i:pa:p:152-169
    DOI: 10.1016/j.jimonfin.2014.05.011
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    Citations

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    Cited by:

    1. Yin-Wong Cheung & Cho-Hoi Hui & Andrew Tsang, 2017. "The RMB Central Parity Formation Mechanism after August 2015: A Statistical Analysis," Working Papers 062017, Hong Kong Institute for Monetary Research.
    2. repec:pal:compes:v:61:y:2019:i:3:d:10.1057_s41294-019-00093-0 is not listed on IDEAS
    3. Fidora, Michael & Giordano, Claire & Schmitz, Martin, 2017. "Real exchange rate misalignments in the euro area," Working Paper Series 2108, European Central Bank.
    4. Fischer, Christoph, 2016. "Determining global currency bloc equilibria: An empirical strategy based on estimates of anchor currency choice," Journal of International Money and Finance, Elsevier, vol. 64(C), pages 214-238.
    5. Fischer, Christoph, 2019. "Equilibrium real exchange rate estimates across time and space," Discussion Papers 14/2019, Deutsche Bundesbank.
    6. repec:bpj:jossai:v:5:y:2017:i:1:p:34-47:n:3 is not listed on IDEAS
    7. Fischer, Christoph, 2015. "Determining global currency bloc equilibria," Annual Conference 2015 (Muenster): Economic Development - Theory and Policy 113197, Verein für Socialpolitik / German Economic Association.
    8. Cheung, Yin-Wong & Hui, Cho-Hoi & Tsang, Andrew, 2018. "The RMB central parity formation mechanism: August 2015 to December 2016," Journal of International Money and Finance, Elsevier, vol. 86(C), pages 223-243.
    9. Yin-Wong Cheung & Shi He, 2019. "Truths and Myths About RMB Misalignment: A Meta-analysis," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 61(3), pages 464-492, September.

    More about this item

    Keywords

    Equilibrium exchange rates; Productivity approach; Price competitiveness; Panel cointegration;

    JEL classification:

    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

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