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Euro Area Export Performance and Competitiveness

Author

Listed:
  • Jarkko Turunen
  • Richard T. Harmsen
  • Tamim Bayoumi

Abstract

Concerns about export growth within the euro area peripheral countries due to a lack of competitiveness within the euro area are a key policy issue. Our analysis suggests that: (i) Long-term price elasticities for intra-euro area exports are at least double those for extra-euro area exports, so traditional real effective exchange rate indexes may overstate the effectiveness of euro depreciation in restoring exports growth in the euro area periphery and; (ii) There are surprisingly wide divergences across alternative relative price measures and even when relative price data suggest a steady loss in intra- (and extra-) euro area competitiveness, the pace of deterioration depends on the measure of relative prices used.

Suggested Citation

  • Jarkko Turunen & Richard T. Harmsen & Tamim Bayoumi, 2011. "Euro Area Export Performance and Competitiveness," IMF Working Papers 11/140, International Monetary Fund.
  • Handle: RePEc:imf:imfwpa:11/140
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    File URL: http://www.imf.org/external/pubs/cat/longres.aspx?sk=24977
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    References listed on IDEAS

    as
    1. Goldstein, Morris & Khan, Mohsin S., 1985. "Income and price effects in foreign trade," Handbook of International Economics,in: R. W. Jones & P. B. Kenen (ed.), Handbook of International Economics, edition 1, volume 2, chapter 20, pages 1041-1105 Elsevier.
    2. Valerie Cerra & Jarkko Soikkeli & Sweta C. Saxena, 2003. "How Competitive is Irish Manufacturing?," The Economic and Social Review, Economic and Social Studies, vol. 34(2), pages 173-193.
    3. Mick Silver, 2007. "Do Unit Value Export, Import, and Terms of Trade Indices Represent or Misrepresent Price Indices?," IMF Working Papers 07/121, International Monetary Fund.
    4. Helge Berger & Volker Nitsch, 2010. "The Euro’s Effecton Trade Imbalances," IMF Working Papers 10/226, International Monetary Fund.
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