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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

No 36/2016, Discussion Papers from Deutsche Bundesbank

Abstract: Real exports are commonly specified as depending on an indicator of price competitiveness and on a measure of foreign activity. This study empirically investigates the suitability of alternative competitiveness indicators in explaining real exports for a broad group of advanced economies. To this end, a panel cointegration analysis is conducted, augmented by a forecasting exercise. In the latter, repeated sampling techniques are used in order to avoid arbitrary sample splits. 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 the 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: 2016
New Economics Papers: this item is included in nep-int
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Journal Article: On the Suitability of Alternative Competitiveness Indicators for Explaining Real Exports of Advanced Economies (2018) Downloads
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