Real effective exchange rates (REERs) are widely used to gauge competitiveness. Yet conventional REERs, based on gross trade flows and consumer price indexes (CPIs), are not well suited to that role when imports are used to produce exports – i.e., with vertical specialisation in trade.
Value-added exchange rates
Rudolfs Bems, Robert Johnson, 6 December 2012
Has production become more fragmented? International vs domestic perspectives
Thibault Fally, 10 January 2012
Production seems more complex and fragmented today than ever before. For instance, airplanes are made of zillions of parts involving many suppliers from various countries (see eg www.newairplane.com).
How the iPhone widens the US trade deficit with China
Yuqing Xing, 10 April 2011
At the centre of global imbalances is the bilateral trade imbalance between China and the US. Most attention to date has been focused on macro factors and China’s exchange-rate regime.
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