Research

The Contribution of Expenditure Growth and Expenditure Switching

August 8, 2016

The article introduces a decomposition of trade flows that allows to measure expenditure-growth effects and expenditure-switching effects, which is applied to 11 euro members 1990-2014.

Most countries, including Germany, recorded unfavorable expenditure-switching effects (demand shifted from domestic to foreign producers); expenditure switching was most unfavorable in Finland, France, and Italy. There is no correlation between unit labor cost growth and expenditure switching.

Author: Enno Schröder
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