Appendix I. Data and Methodology for Time Series Empirical Results of Chapter III
Basile, R., S. de Nardis, A. Girardi, and C. Pappalardo, 2007, “Le Politiche di Prezzo degli Esportatori Italiani: Un’ Analisi su Dati di Impresa” Lanza and Quintieri, pp. 161–190.
Bugamelli, M., 2007, “Prezzi delle esportazioni, qualità dei prodotti e caratteristiche di impresa: un’analisi su un campione di imprese italiane,” Lanza and Quintieri, pp. 111–160.
De Brouwer, G., and N. Ericsson, 1998 “Modeling Inflation in Australia,” Journal of Business and Economic Statistics, Vol. 16, No 4, pp. 433–449.
Drummond, P., 2007, “Italy: How Large is the External Competitiveness Gap?” Italy— Selected Issues, IMF Country Report No. 07/64, pp. 3–14.
Escolano, J., 2008, “Competitiveness of the Southern euro area: a Helicopter Tour,” Competitiveness in the Southern Euro Area, Chapter I, forthcoming.
Estrada, A., J.L. Fernandez, E. Moral, and A.V. Regil, 2004, “A Quarterly Macroeconomic Model of the Spanish Economy,” Working Paper No 0413 (Bank of Spain).
Fabrizio., S, D. Igan, and A. Mody, 2007, “The Dynamics of Product Quality and International Competitiveness,” IMF Working Paper No. 07/97 (April).
Fabrizio, S., 2008, “Are the Southern euro area Countries Advancing in the Search for New and Better Products?” Competitiveness in the Southern Euro Area, Chapter IV, forthcoming.
Faini, R., and A. Sapir, 2005, Un Modello Obsoleto? Crescita e Specializazzione dell’Economia Italiana. In T. Boeri, R. Faini, A. Ichino, G. Pisauro and C. Scarpa (eds.), Oltre il Declino, Il Mulino, Bologna.
Finger, M., and M.E. Kreinin, 1979, “A Measure of “Export Similarity” and Its Possible Uses,” The Economic Journal 89 (356), pp. 905–12.
Gutierrez, E., 2008, “Services Exports in SEA-5: Performance and Restructuring,” Competitiveness in the Southern Euro Area, Chapter VI, forthcoming.
International Monetary Fund, 2006, Methodology for CGER Exchange Rate Assessments. Available via the Internet: www.imf.org/external/np/pp/eng/2006/110806.pdf.
International Monetary Fund, 2007, “Globalization of Labor,” World Economic Outlook (April) pp. 161–192. Available via the Internet: http://www.imf.org/external/pubs/ft/weo/2007/01/index.htm.
Lissovolik, B., 2008, “Southern euro area Exports: Wind in the Sails from Global Growth?” Competitiveness in the Southern Euro Area, Chapter II, forthcoming.
Monti, P., 2005, “Caratteristiche e mutamenti della specializazzione delle esportazioni italiane,” Temi di Discussione del Servizio Studi No 559 (Banca d’Italia).
Moreno-Badia, M., 2008 “Are The Southern euro area’s Exports Moving to Markets with Less Competition?” Competitiveness in the Southern Euro Area, Chapter V, forthcoming.
Schule, W., 2008, “The Role of Imports—Structural Shifts and Economic Benefits” Competitiveness in the Southern Euro Area, Chapter VII, forthcoming.
Xiao, Y., 2008, “The Role of FDI in Boosting Productivity and Exports in the Southern euro area Economies,” Competitiveness in the Southern Euro Area, Chapter IX, forthcoming).
See http://www.istat.it/salastampa/comunicati/non_calendario/20080225_00/. However, the data release has been incomplete for some periods, with a follow-up expected further during 2008, see also Bugamelli 2007 for an early indication of a bias in the data.
The analysis concentrates on exports and other aspects of external performance, rather than “broader competitiveness” issues of growth, productivity, and employment.
Italy’s nominal labor costs, measured in euros per hour worked, are still estimated to be much lower than in Germany and (to a lesser extent) France, (see Lanza and Quintieri, 2007).
While there is some ambiguity, ULCs in manufacturing have been considered more relevant for competitiveness than whole-economy ULCs (see Danninger and Joutz, 2007).
Everaert, et al, (2005) employs a set of more country-specific equations that differ across countries (ad-hoc inclusion of trend terms, selected use of restricted coefficients for some countries, different breakdown of sectors). In this study, a fully-comparable structure, which turned out statistically acceptable, is used.
For the exports regression, several available alternative measures of the key explanatory variables were initially tested: for price competitiveness, real effective exchange rates based on ULCs versus that on the CPI; for global demand, real (trade-weighted and unweighted) GDP growth versus trade-weighted real imports.
An alternative measure of the real exchange rate—based on the CPI—underperforms statistically compared to ULCs. In any case, using this measure of competitiveness instead of ULCs does not modify the thrust of the results for Italy.
However, given the significant cumulative rise in Italy’s unit labor costs, their overall contribution to competitiveness losses would be larger than in other countries (see Everaert, 2005). Also, the elasticity is particularly small for Germany, but it is not clear whether there is comparability in the asymmetric environment of declining German ULCs and rising ULCs for the other countries.
As indicated by Danninger and Joutz, 2007, given the definition of export demand, the elasticity is interpretable in terms of export market shares, with values smaller than one indicating a loss in this share.
Alternatively, this result may reflect the process of “forced” upgrading through the exit of the lower-quality producers, whereby lower real exports are accompanied by higher unit values.
As a counterpoint, there is also evidence whereby due to higher unit value levels of Italy’s exports (Monti, 2005) “effective” competition may well be weaker.
The definitions spelling out full methodology of these Figures can be found in Lissovolik, 2008.
However, it should be noted that these aggregate value added figures include not only exports but also domestic value added that may be also influenced by domestic price developments. Thus they are not fully reflective of trends in exportables, especially in sectors that are relatively less export-oriented.