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Measuring Competitiveness

  • J. Peter Neary

    (University College Dublin and CEPR)

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 which highlight the potential exposure of the Irish economy to fluctuations in the euro-sterling exchange rate.

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File URL: http://www.esr.ie/Vol37_2/04_neary_article.pdf
File Function: First version, 2006
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Article provided by Economic and Social Studies in its journal Economic and Social Review.

Volume (Year): 37 (2006)
Issue (Month): 2 ()
Pages: 197-213

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Handle: RePEc:eso:journl:v:37:y:2006:i:2:p:197-213
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  1. Richard Blundell & Martin Browning & Ian Crawford, 1997. "Non-parametric Engel curves and revealed preferences," IFS Working Papers W97/14, Institute for Fiscal Studies.
  2. Neary, J.P. & Thom, D.R., 1996. "Punts, Pounds and Euros: In Search of an Optimum Currency Area," Papers 96/24, College Dublin, Department of Political Economy-.
  3. Anderson, James E & Neary, J Peter, 1992. "A New Approach to Evaluating Trade Policy," CEPR Discussion Papers 683, C.E.P.R. Discussion Papers.
  4. Maurice Obstfeld & Kenneth Rogoff, 1994. "Exchange Rate Dynamics Redux," NBER Working Papers 4693, National Bureau of Economic Research, Inc.
  5. Wendy Carlin & Andrew Glyn & John Van Reenen, 1999. "Export Market Performance of OECD countries: an empirical examination of the role of cost competitiveness," IFS Working Papers W99/22, Institute for Fiscal Studies.
  6. Lane, P, 1999. "The New Open Economy Macroeconomics: A Survey," Trinity Economics Papers 993, Trinity College Dublin, Department of Economics.
  7. James E. Anderson & J. Peter Neary, 2005. "Measuring the Restrictiveness of International Trade Policy," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262012200.
  8. Walsh, Brendan, 2000. "Cyclical and Structural Influences on Irish Unemployment," Oxford Economic Papers, Oxford University Press, vol. 52(1), pages 119-45, January.
  9. 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.
  10. Menzie Chinn, 2006. "A Primer on Real Effective Exchange Rates: Determinants, Overvaluation, Trade Flows and Competitive Devaluation," Open Economies Review, Springer, vol. 17(1), pages 115-143, January.
  11. 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.
  12. Neary, J Peter, 1987. "Determinants of the Equilibrium Real Exchange Rate," CEPR Discussion Papers 209, C.E.P.R. Discussion Papers.
  13. Tamim Bayoumi & Jaewoo Lee & Sarma Jayanthi, 2006. "New Rates from New Weights," IMF Staff Papers, Palgrave Macmillan, vol. 53(2), pages 4.
  14. Baker, Terence J. & FitzGerald, John & Honohan, Patrick, 1996. "Economic Implications for Ireland of EMU," Research Series, Economic and Social Research Institute (ESRI), number PRS28.
  15. 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.
  16. J. Peter Neary, 2004. "Rationalising the Penn World Table: True Multilateral Indices for International Comparisons of Real Income," Working Papers 199622, School of Economics, University College Dublin.
  17. Ian Marsh & Stephen Tokarick, 1996. "An assessment of three measures of competitiveness," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 132(4), pages 700-722, December.
  18. Valerie Cerra & Jarkko Soikkeli, 2002. "How Competitive Is Irish Manufacturing?," IMF Working Papers 02/160, International Monetary Fund.
  19. Diewert, W. E., 1976. "Exact and superlative index numbers," Journal of Econometrics, Elsevier, vol. 4(2), pages 115-145, May.
  20. Barry, F, 1997. "Dangers for Ireland of and EMU without the UK : Some Calibration Results," Papers 97/20, College Dublin, Department of Political Economy-.
  21. J. Peter Neary, 2003. "Competitive versus Comparative Advantage," The World Economy, Wiley Blackwell, vol. 26(4), pages 457-470, 04.
  22. J. Peter Neary, 1985. "International Factor Mobility, Minimum Wage Rates, and Factor-Price Equalization: A Synthesis," The Quarterly Journal of Economics, Oxford University Press, vol. 100(3), pages 551-570.
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