Measuring Competitiveness in a World of Global Value Chains

By Tamim Bayoumi, Maximiliano Appendino, Jelle Barkema, Diego A. Cerdeiro

November 1, 2018

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Format: Chicago

Tamim Bayoumi, Maximiliano Appendino, Jelle Barkema, and Diego A. Cerdeiro Measuring Competitiveness in a World of Global Value Chains, (USA: International Monetary Fund, 2018) accessed October 6, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

All common real effective exchange rate indexes assume trade is only in final goods, despite the growing presence of global supply chains. Extending effective exchange rate indexes to include such intermediate goods can imply radically different effective exchange rate weights, depending on the relative substitutability of goods in final demand and in production. Unfortunately, the effect of these shifts in weights are difficult to identify empirically because the two currencies most affected—the dollar and the renminbi—have moved closely together. As the renminbi becomes more flexible, however, it will be important to determine which assumptions are the most realistic.

Subject: Competition, Exchange rates, Exports, Financial markets, Foreign exchange, Global value chains, Globalization, International trade, Real effective exchange rates

Keywords: Competition, Exchange rate, Exchange rate weight, Exchange rates, Exports, Global, Global value chains, Goods, International competitiveness, Real effective exchange rates, Renminbi, Renminbi depreciation, Trade, Trade openness, Trade pattern, Value chain, Weight calculation, WP

Publication Details

Pages:

27
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2018/229
Stock No:

WPIEA2018229
ISBN:

9781484337134
ISSN:

1018-5941

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