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

Author/Editor:

Leslie Lipschitz ; Donogh McDonald

Publication Date:

March 1, 1991

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

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.

Series:

Working Paper No. 1991/025

Subject:

English

Publication Date:

March 1, 1991

ISBN/ISSN:

9781451844184/1018-5941

Stock No:

WPIEA0251991

Pages:

48

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