This paper investigates the Balassa-Samuelson effect for nine CEE transition countries Duval, Romain, “Taux de change réel et effet Balassa-Samuelson. 1The Balassa-Samuelson model (BS hereafter) has achieved workhorse status in the analysis of trends observed in industrialized countries regarding the. By Sylviane Guillaumont Jeanneney and Ping Hua; L’effet Balassa-Samuelson et les différences d’inflation entre les provinces chinoises.

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Panel data and time series techniques have crowded out old cross-section tests, demand side and terms of trade variables have emerged as explanatory variables, new econometric methodologies have replaced old ones, and recent improvements with endogenous tradability have provided direction for future researchers. By the law of one priceentirely tradable goods cannot vary greatly in price by location because buyers can source from the lowest cost location.

A typical labour market pattern is that high- GDP countries have a higher ratio of service-sector to traded-goods-sector employment than low-GDP countries. David, International Economic Transactions: The Balassa—Samuelson hypothesis is the proposition that this can be explained by the greater variation in productivitybetween developed and less developed countries, in the traded goods’ sectors than in the non-tradable sectors.

Most professional economists accept that the Balassa—Samuelson effect model has some merit. Consensus has been reached on the testing of internal and external HBS effects vis a vis a numeraire country with a strong reservation against the purchasing power parity assumption in the tradable sector. Help us Corrections Found an error or omission? Analysis of empirical data shows that the vast majority of the evidence supports the HBS model.

In these analyzed estimates, country specific HBS coefficients have been estimated times in total, and at least once for 65 different countries”. Almost all cross-section tests confirm the model, while panel data results confirm the model for the majority of countries included in the tests.


More about this item JEL classification: If you are a registered author of this item, you may also want to check the “citations” tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

You can help correct errors and omissions. Where the subscript “t” denotes the tradables sector. It also allows you to accept potential citations to this item that we are uncertain about. Although pub beer is transportable, the pub itself is not. Do we understand samuelskn we see? Yves Bourdet and Hans Falck have studied the effect of Cape Verde remittances on the traded-goods sector.

When requesting a correction, please mention this item’s handle: Porter samuslson The Competitive Advantage of Nations says that currency depreciations can reduce growth, and that ‘overvalued’ currencies can contribute to domestic productivity growth by ‘forcing’ efficiency improvements in the tradables sector by exposing it to international competition at unfavourable terms of trade.

This is because services tend to be superior goodswhich are consumed proportionately more balaxsa at higher incomes. This may be treated as anecdotal evidence in favour of the Balassa—Samuelson hypothesis, since supermarket beer is an easily transportable, traded good. If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. F31 – International Economics – – International Finance – – – Foreign Exchange Statistics Access and download statistics Corrections All material on this site has been provided by the respective publishers and authors.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Looking at the price level distribution within a country gives a clearer picture of the effect, because this removes samuelskn complicating factors:.


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Balassa–Samuelson effect – Wikipedia

However most services must be delivered locally e. See general information about how to correct material in RePEc. As the RER appreciates, the competitiveness of the traded-goods sectors falls in terms of the international price of traded goods.

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Taux de change reel et effet Balassa-Samuelson

The average asking price for a house in a prosperous city can be ten times that of an identical house in a depressed area of the same country. Refinements to the econometric techniques and debate about alternative models are continuing in the International economics community.

The BS-hypothesis explanation for the price differentials is that the ‘productivity’ of pub employees in pints served per hour is more uniform than the ‘productivity’ in foreign currency earned per year of people working in the dominant tradable sector in each region of the country financial services in the south of England, manufacturing in the north.

The effect had previously been hypothesized in the first edition of Roy Forbes Harrod ‘s International Economicspp. Exchange rate movements are believed by some to affect productivity; if this is true then regressing RER movements on differential productivity growth will be ‘polluted’ by a totally different relationship between the variables 1. Retrieved from ” https: