02223cas a2200253 a 4500 AALejournalIMF005196 230101c9999 xx r poo 0 0eng d 5.00 USD 9781451870985 1018-5941 BD-DhAAL BD-DhAAL Bennett, Herman. International Competitiveness of the Mediterranean Quartet : A Heterogeneous-Product Approach / Herman Bennett, Ziga Zarnic. Washington, D.C. : International Monetary Fund, 2008. 1 online resource (35 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students The real effective exchange rate (REER) is the most commonly used measure for assessing international competitiveness. We develop a methodology to estimate the REER that incorporates two distinctive elements that are not considered in the current literature and apply it to the Mediterranean Quartet (MQ) of Greece, Italy, Portugal, and Spain, whose common pattern of real appreciation has created concern in policy and academic circles. The two elements that we add to the existing literature are (i) product heterogeneity when identifying each country's international competitors and their weights and (ii) a comprehensive treatment of services exports. Our refined measure suggests a modest reduction in the observed REER gap between the MQ countries and the other euro area countries. In particular, considering product heterogeneity and services exports implies a lower real appreciation from 1998 to 2006 on the order of 2-3 percent for all MQ countries. These are difference-in-difference estimates relative to the results obtained for the rest of the euro area countries using the same methodology. Mode of access: Internet Zarnic, Ziga. IMF Working Papers; Working Paper ; No. 2008/240 Full text available on IMF http://elibrary.imf.org/view/journals/001/2008/240/001.2008.issue-240-en.xml IMF e-Library