Not so constant! The constant-market-shares analysis and the exchange rate

Summary We show that the results of the Constant-Market-Shares analysis are influenced by the — arbitrary — choice of the currency in which the data have been expressed. The so-called static competition effect is not influenced by the exchange rate. The Dutch export performance in 1989–1991 disaggregated by 17 OECD countries and five product groups serves as an empirical illustration of our findings.Harry Oldersma is at the Directorate-General for Foreign Economic Relations, Department for International Economic Analysis and General Affairs, and Peter van Bergeijk is at the Economic Policy Directorate. This article should not be attributed to the government of The Netherlands.A preliminary version of this paper was presented at the ECOZOEK workshop on international economics, Rotterdam, June 3, 1992. Comments by Steven Brakman, Catrinus Jepma, Charles van Marrewijk, Ed Westerhout and the referees of this journal were very useful.