International price and cost competitiveness

The notion of competitiveness and of price competitiveness specifically is central to the current debate on the state of the European economy. Southern European countries are said to suffer from a price competitiveness problem that limits their capacity to sell products abroad and has been responsible for the accumulation of large current account deficits over the last decade. But also countries like Italy and France do not post a much better record in relative price developments. At the same time, sector- and firm-level evidence surprises with some positive results that reveal the presence of national champions in specific sectors and/or types of firms, even in countries that have a mediocre aggregate performance.

What is then the best way to measure price and cost competitiveness? What are the strengths and weaknesses of the mostly used indicators (e.g., unit labour costs, real effective exchange rates)? How to reconcile macro with  micro-evidence on relative price developments? The workshop brought together economists and statisticians from academia, the public and the private sector to answer these questions.

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