Real Exchange Rates and Competitiveness: A Clarification of Concepts, and Some Measurements for Europe

Leslie Lipschitz and Donogh McDonald

No 1991/025, IMF Working Papers from International Monetary Fund

Abstract: This paper examines indicators of competitiveness. It analyzes the conceptual foundations of conventional measures of the real exchange rate and finds that inferences about competitiveness from these indicators require strong, and in many cases implausible, assumptions. Based on this analysis some alternative measures are proposed and their use is illustrated using data from Europe. Given the usefulness of standardized indicators, four simple charts are proposed; these help solve some conundrums in the European data and provide the basis for a richer set of inferences about competitiveness.

Keywords: WP; real exchange rate; rate of return; average product; traded goods sector; productivity development; sector vis-à-vis; capital-augmenting productivity improvement; capital productivity rise; traded-goods sector; cost competitiveness; competitiveness indicator; exchange rate; goods output; Competition; Productivity; Labor costs; Manufacturing; Europe (search for similar items in EconPapers)
Pages: 48
Date: 1991-03-01
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Citations: View citations in EconPapers (26)

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