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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Taux de change reel et effet Balassa-Samuelson. A pint of pub beer is famously more expensive in the south of England than the north, but supermarket beer prices are very similar. This results in southern pubs incurring a higher labour cost per pint served. Although the employees of southern pubs are not significantly more productive than their counterparts in the north, southern pubs must pay wages comparable to those offered by other southern firms in order to keep their staff.
You can help adding them by using this form. Therefore, most of the contemporary authors see for example: Corrections All material on this site has been provided by the respective publishers and authors. Please note that corrections may take a couple of weeks to filter through the various RePEc services.
EconPapers: L’effet Balassa-Samuelson et les différences d’inflation entre les provinces chinoises
Looking at the price level distribution within a country gives a clearer picture of the effect, because this removes three complicating factors:. Also, one should have in mind that a lot of papers have been published since then.
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. General contact details of provider: This may be treated as anecdotal eamuelson in favour of the Balassa—Samuelson hypothesis, since supermarket beer is an balassz transportable, traded good.
Although some negative results have been returned, there has been strong support for the predictions of a cointegration between relative productivity and relative prices within a country and between countries, while the interpretation of evidence for cointegration between real egfet rate and relative productivity has been much more controversial.
By the law of one priceentirely tradable goods cannot vary greatly in price by location because buyers can source from the lowest cost location. This explanation is similar to the BS-effect, since an industry needing protection must be measurably less productive in the world market of the commodity it produces.

Analysis of empirical data shows that the vast majority of the evidence supports the HBS model. Lipsey and Swedenborg show a strong correlation between the barriers to Free trade and the domestic price level.

Refinements to the econometric techniques and debate about alternative models are continuing in the International economics community. For instance, other effects of exchange rate movements might mask the long-term BS-hypothesis mechanism making it harder to detect if it exists.
In order to protect domestic producers import barriers are raised, allowing the local price for the traded good to rise beyond the international price.
Note that the lack of a country specific subscript on the price of tradables means that tradable goods prices are equalized between the two countries. If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. From Wikipedia, the free encyclopedia. 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.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: The supply-side economists balassx others have argued that raising International competitiveness through policies that promote traded goods sectors’ productivity at the expense of other sectors will increase a nation’s GDPand sajuelson its standard of livingwhen compared with treating the sectors equally.
L’effet Balassa-Samuelson et les différences d’inflation entre les provinces chinoises
Dans cet article, en employant des donnees construites a partir de la base de donnees sectorielles internationales ISDB publiee par l’OCDE 14 pays,nous degageons trois faits stylises complementaires, contraires a la theorie, dont les deux premiers etfet une premiere confirmation econometrique. This observation about the systematic differences in consumer prices is called the ” Penn effect “.

A shift in preferences at the microeconomic level, caused by an income effect can change the make-up of the consumer price index to include proportionately more expenditure on services.
Exchange rate movements are believed by some to edfet 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.
However, the Balassa—Samuelson BS hypothesis implies that countries with rapidly expanding economies should tend to have more rapidly appreciating exchange rates for instance the Four Asian Ssmuelson ; conventional econometric tests have resulted with mixed findings for the predictions of the BS effect. In this model, there has been no change in real balasssa productivities, but money price productivity in traded goods has been exogenously lowered through currency appreciation.
However, this reasoning is slightly different from the pure BS-hypothesis, because the goods being produced are ‘traded-goods’, even though protectionist measures mean that they are more expensive on the domestic market than the international market, so they will not be ” traded ” internationally [5].
What is needed is that wages are at least related to productivity. The export wamuelson of the Cape Verde economy suffered a similar fall in productivity during the same period, which was caused entirely by capital flows and not by the BS-effect. This is because effer tend to be superior goodswhich are consumed proportionately more heavily at higher incomes. F31 – International Economics – – International Finance – – – Foreign Exchange Statistics Access and download statistics Corrections All material on this site has been rffet by the respective publishers and authors.
The Penn effect is that PPP-deviations usually occur in the same direction: This alone may shift the effrt price indexand might make the non-trade sector look relatively less productive than it had been when demand was lower; if service quality rather than quantity follows diminishing returns to labour input, a general demand for a higher service quality automatically produces a reduction in per-capita productivity.
