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

Author

Listed:
  • Christoph Fischer

    (Deutsche Bundesbank)

  • Oliver Hossfeld

    (Deutsche Bundesbank
    Leipzig Graduate School of Management)

  • Karin Radeck

    (Deutsche Bundesbank)

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.

Suggested Citation

  • Christoph Fischer & Oliver Hossfeld & Karin Radeck, 2018. "On the Suitability of Alternative Competitiveness Indicators for Explaining Real Exports of Advanced Economies," Open Economies Review, Springer, vol. 29(1), pages 119-139, February.
    • Handle: RePEc:kap:openec:v:29:y:2018:i:1:d:10.1007_s11079-017-9457-9
    DOI: 10.1007/s11079-017-9457-9
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    Cited by:

    1. Karsten Staehr, 2021. "Export performance and capacity pressures in Central and Eastern Europe," International Economics, CEPII research center, issue 165, pages 204-217.
    2. Eder, Andreas & Koller, Wolfgang & Mahlberg, Bernhard, 2019. "Price Competitiveness in the European Monetary Union: A Decomposition of Inflation Differentials based on the Leontief Input-Output Price Model for the Period 2000 to 2014," MPRA Paper 95158, University Library of Munich, Germany.
    3. Mika Nieminen & Kari Heimonen & Timo Tohmo, 2019. "Current Accounts and Coordination of Wage Bargaining," Open Economies Review, Springer, vol. 30(2), pages 319-341, April.

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    More about this item

    Keywords

    International price competitiveness; Real export demand; Price elasticity of exports;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F47 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Forecasting and Simulation: Models and Applications

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