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

23 Pages Posted: 10 Oct 2016

See all articles by Christoph A. Fischer

Christoph A. Fischer

Deutsche Bundesbank

Oliver Hossfeld

Deutsche Bundesbank

Karin Radeck

Deutsche Bundesbank

Date Written: 2016

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

JEL Classification: C23, F14, F31, F47

Suggested Citation

Fischer, Christoph A. and Hossfeld, Oliver and Radeck, Karin, On the Suitability of Alternative Competitiveness Indicators for Explaining Real Exports of Advanced Economies (2016). Available at SSRN: https://ssrn.com/abstract=2849767 or http://dx.doi.org/10.2139/ssrn.2849767

Christoph A. Fischer (Contact Author)

Deutsche Bundesbank ( email )

Wilhelm-Epstein-Str. 14
Frankfurt/Main, 60431
Germany

Oliver Hossfeld

Deutsche Bundesbank ( email )

Wilhelm-Epstein-Str. 14
Frankfurt/Main, 60431
Germany

Karin Radeck

Deutsche Bundesbank

Wilhelm-Epstein-Str. 14
Frankfurt/Main, 60431
Germany

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