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On the Suitability of Alternative Competitiveness Indicators for Explaining Real Exports of Advanced Economies

Christoph Fischer, Oliver Hossfeld () and Karin Radeck
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Karin Radeck: Deutsche Bundesbank

Open Economies Review, 2018, vol. 29, issue 1, 119-139

Abstract: Abstract We discuss the relative merits of various indicators of international price competitiveness from a conceptual point of view, and empirically check which indicator serves best to predict real exports in the long run. To this end, a panel cointegration analysis is conducted, augmented by a forecast exercise. In the latter, repeated sampling techniques are used in order to avoid arbitrary sample splits. In line with the theoretical reasoning, we find that broad price- and cost-based indicators are to be preferred to narrow price-based measures such as CPI- or PPI-deflated real exchange rates. Furthermore, the evidence points towards using world trade as external activity variable instead of GDP- or real imports-based measures.

Keywords: International price competitiveness; Real export demand; Price elasticity of exports (search for similar items in EconPapers)
JEL-codes: C23 F14 F31 F47 (search for similar items in EconPapers)
Date: 2018
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Working Paper: On the suitability of alternative competitiveness indicators for explaining real exports of advanced economies (2016) Downloads
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