Measuring Price Competitiveness for Industrial Country Trade in Manufactures

International Monetary Fund

No 1987/034, IMF Working Papers from International Monetary Fund

Abstract: This paper describes the methods used by the Research Department to construct the indicators of price competitiveness, or real effective exchange rates, published for 17 industrial countries in International Financial Statistics. The weighting scheme used to construct these indicators is derived from a disaggregated system of demand equations encompassing trade relations in bilateral and third-country markets. Other commonly used trade-weighting schemes are shown to be special cases of the more general and less restrictive competitiveness weights. Differences in the measurement of relative price changes using indices based on other weights are explained by the greater informational content of the competitiveness weights.

Keywords: WP; competitiveness weight; price level; competitiveness indicator; export market; export weight; import-export indicator; Competition; Exports; Imports; Export competitiveness; Trade balance; Eastern Europe; Global (search for similar items in EconPapers)
Pages: 94
Date: 1987-03-01
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Citations: View citations in EconPapers (6)

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