Harrod-Balassa-Samuelson Effect in Selected Countries of Central and Eastern Europe

Błaszkiewicz, Monika; Kowalski, Przemysław; Rawdanowicz, Łukasz; Woźniak, Przemysław

doi:10.2139/ssrn.1414893

Cited by 14 publications

(9 citation statements)

References 15 publications

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“…Others, particularly Egert et al (2003), show that this effect has now evaporated. A compelling empirical study by Blaszkiewicz et al (2004) shows that the Balassa-Samuelson effect in Poland has been negligible since 1999, while before that it was quite pronounced, contributing between 1.5 and 2 per cent to annual inflation. With the expiration of this effect, the potential conflicts between inflation and exchange rate stability targets have little merit; so do the arguments for an early euroization that are derived on the basis of this effect.…”

Section: Sequencing Of Monetary Policy For the Euro Adoptionmentioning

confidence: 99%

Monetary and Fiscal Policy in Poland During EU Accession

Orłowski¹

2007

Macroeconomic Policies for EU Accession

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Section: Sequencing Of Monetary Policy For the Euro Adoptionmentioning

confidence: 99%

Monetary and Fiscal Policy in Poland During EU Accession

Orłowski¹

2007

Macroeconomic Policies for EU Accession

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“…In the annual Report on the economic transition of the CEE countries, the European Bank for Economic Development extends this feature also to Romania and Bulgaria. 2 See, for instance, the surveys by Breuss (2003) and Blaszkiewicz et al (2004) In accordance with the European Commission (2002), the higher values obtained in the earlier empirical analysis of the BS effect could be attributed to some institutional influences of the transition period. This implies that, in the post-transition period, there are other determinants playing an important role in RER appreciations of CEE countries.…”

mentioning

confidence: 91%

Beyond the Balassa–Samuelson effect in some new member states of the European Union

2008

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“…Such a finding is in sharp contrast to the BS theory which staunchly believes in the definite existence of PPP for tradable sectors and renders nontraded sectors solely responsible for inducing trend departures to the real exchange rate. This tremendous finding of [4] has proven to be a breakthrough in the current works on the similar line of research; therefore, the validity of PPP for traded-sector prices was investigated for other regions also [6,[12][13][14][15][16][17][18][19][20][21][22][23]. Ref.…”

Section: Introductionmentioning

confidence: 99%

Another Prospective on Real Exchange Rate and the Traded Goods Prices: Revisiting Balassa–Samuelson Hypothesis

Ishaq

Ghouse

Bhatti³

2022

Sustainability

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This paper proposes a new variant and reinvestigates the validity of the Balassa–Samuelson (BS) hypothesis for nine East and South Asian countries under new specifications. The BS hypothesis is often criticized for one of its fundamental, but oversimplified assumptions related to Purchasing Power Parity (PPP) holding which can be confirmed for cronss-country tradables’ prices, implying nontraded-sector prices are solely responsible for inducing trend deviations in real exchange rate. The assumption, when empirically tested, does not always hold valid, revealing a price difference in tradables for Asian countries against the world (U.S.), a potential driver of their trend in real exchange rate deviations (appreciation). A new approach based on Fully Modified OLS (FMOLS) and Dynamic OLS (DOLS) is used to estimate the long-run BS coefficients, while the error correction mechanism is employed to estimate the short-run estimates. These results motivated us to allow for the inexistence of PPP for cross-country tradables; the standard form of the BS model is then tested in its relaxed form using time-series and panel data econometric tests. Despite a relaxing of the BS model in favor of tradables’ price deviation from PPP, the results are not sufficiently supportive of the BS hypothesis. These findings hold strong economic implications for Asia, suggesting that intercountry sectoral productivity bias of regional economies with the world does not necessarily exert substantial effects on their long-run real exchange rates. Additionally, contrary to the core belief of the BS model, intercountry tradables’ price differentials are found to substantially explain real exchange rate movements away from their long-run equilibrium.

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Harrod-Balassa-Samuelson Effect in Selected Countries of Central and Eastern Europe

Cited by 14 publications

References 15 publications

Monetary and Fiscal Policy in Poland During EU Accession

Monetary and Fiscal Policy in Poland During EU Accession

Beyond the Balassa–Samuelson effect in some new member states of the European Union

Another Prospective on Real Exchange Rate and the Traded Goods Prices: Revisiting Balassa–Samuelson Hypothesis

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