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Method of Calculating Effective Exchange Rates and Indicators of Competitiveness

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  • Martine Durand

Abstract

This paper describes the method of calculation of competitiveness indicators and effective exchange rates that are published half-yearly by the Secretariat in the Economic Outlook. This calculation is based on a double-weighting principle: the procedure calculates the relative importance of different countries on each market according to the relative importance of these markets for the country in question. The calculations include the impact of the domestic producer in each market, i.e. a particular country is considered as a competitor to other exporters to its own market. On the other hand, in calculating the importance of each competitor to a given country the share of the country in question is excluded in every market, i.e. a country cannot compete with itself. Weighting matrices have been constructed for each year, starting in 1970, and have been used to define and compute relative indices of costs, prices and exchange rates ... Le présent article décrit la méthode de calcul des indicateurs de compétitivité et de taux de change effectifs que le Secrétariat publie régulièrement dans les Perspectives Economiques. Le calcul est fondé sur un principe de double pondération : on cherche à mesurer l'importance relative de différents pays sur différents marchés en fonction de l'importance relative de ces divers marchés pour les pays en question. Les calculs prennent en compte l'impact des marchés domestiques, à savoir qu'un pays est lui-même un concurrent sur son propre marché. Par contre, la mesure de l'importance relative des concurrents d'un pays sur chaque marché exclut le pays en question, ce dernier ne pouvant être en concurrence avec lui-même. Des matrices de poids ont été construites depuis 1970 et ont servi à la definition et au calcul d'indices relatifs de coût et de prix et de taux de change ...

Suggested Citation

  • Martine Durand, 1986. "Method of Calculating Effective Exchange Rates and Indicators of Competitiveness," OECD Economics Department Working Papers 29, OECD Publishing.
  • Handle: RePEc:oec:ecoaaa:29-en
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    File URL: https://doi.org/10.1787/058386106013
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    1. repec:hhs:bofitp:2013_018 is not listed on IDEAS
    2. Åkerholm, Johnny, 1988. "External adjustment in small open economies : Some recent experience," Research Discussion Papers 6/1988, Bank of Finland.
    3. Madsen, Jakob B., 1995. "Inflation and aggregate demand shocks," Journal of Policy Modeling, Elsevier, vol. 17(6), pages 659-666, December.
    4. 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.
    5. Athanasoglou, Panayiotis P. & Bardaka, Ioanna C., 2010. "New trade theory, non-price competitiveness and export performance," Economic Modelling, Elsevier, vol. 27(1), pages 217-228, January.
    6. Benkovskis, Konstantins & Wörz, Julia, 2018. "What drives the market share changes? Price versus non-price factors," Structural Change and Economic Dynamics, Elsevier, vol. 45(C), pages 9-29.
    7. Jakob Madsen, 1998. "Errors-in-variables, supply side effects, and price elasticities in foreign trade," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 134(4), pages 612-637, December.
    8. Konstantīns Beņkovskis, 2012. "Competitiveness of Latvia's exporters," Baltic Journal of Economics, Baltic International Centre for Economic Policy Studies, vol. 12(2), pages 17-45, December.

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