Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/154222
Authors: 
Giordano, Claire
Zollino, Francesco
Year of Publication: 
2015
Series/Report no.: 
ECB Working Paper 1789
Abstract: 
Since the mid-2000s price-competitiveness indicators for some euro-area countries have been providing conflicting signals. Against a stability of the producer price (PPI)-based measure, the manufacturing unit labour cost (ULCM)-deflated indicator points to a major competitiveness loss in Italy; we argue that the discrepancy mostly reflects a divergence of ULCM and PPI trends in competitor countries. Owing to the fading representativeness of labour on overall costs, price-based indicators appear to be more appropriate than those based on ULCMs to assess external competitiveness. In Italy ULC-based indicators play a less relevant role relative to price-deflated measures in explaining exports; the opposite holds true for Germany and France, whereas in Spain exports are insensitive to prices. Non-price competitiveness proves important in explaining Italian, German and, in particular, Spanish exports. Imports react to price-competitiveness dynamics only in Italy; considering the participation in global value chains is useful to correctly identify import sensitivity to domestic and foreign demand.
Subjects: 
non-price competitiveness
price competitiveness
producer prices
unit labour costs
JEL: 
F14
F62
ISBN: 
978-92-899-1601-1
Document Type: 
Working Paper

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