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More Evidence in Favor of the Balassa–Samuelson Hypothesis

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  • Stephen B. DeLoach

Abstract

This study provides additional evidence of a significant long‐run relationship between the relative price of nontradables and real output, consistent with the productivity‐bias hypothesis of Balassa and Samuelson. The results, however, also indicate that additional permanent supply shocks, specifically real oil prices, need to be considered. In every case, relative prices are significantly affected by permanent innovations in real output and real oil prices. The general lack of evidence of cointegration, however, points to the possibility that additional long‐run determinants of relative prices have been omitted.

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  • Stephen B. DeLoach, 2001. "More Evidence in Favor of the Balassa–Samuelson Hypothesis," Review of International Economics, Wiley Blackwell, vol. 9(2), pages 336-342, May.
    • Handle: RePEc:bla:reviec:v:9:y:2001:i:2:p:336-342
    DOI: 10.1111/1467-9396.00283
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    Cited by:

    1. Yihui Lan, 2003. "The Long-Term Behaviour of Exchange Rates, Part II: Aspects of Exchange-Rate Economics," Economics Discussion / Working Papers 03-06, The University of Western Australia, Department of Economics.
    2. Fischer, Christoph, 2007. "An assessment of the trends in international price competitiveness among EMU countries," Discussion Paper Series 1: Economic Studies 2007,08, Deutsche Bundesbank.
    3. Clements, Kenneth & Lan, Yihui & Roberts, John, 2008. "Exchange-rate economics for the resources sector," Resources Policy, Elsevier, vol. 33(2), pages 102-117, June.
    4. Christoph Fischer, 2004. "Real currency appreciation in accession countries: Balassa-Samuelson and investment demand," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 140(2), pages 179-210, June.
    5. Christoph Fischer, 2006. "PPP: a disaggregated view," Applied Financial Economics, Taylor & Francis Journals, vol. 16(1-2), pages 93-108.
    6. Tuomas A. Peltonen & Adina Popescu & Michael Sager, 2011. "Can non‐linear real shocks explain the persistence of PPP exchange rate disequilibria?," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 16(3), pages 290-306, July.
    7. Óscar Dejuán & Eladio Febrero, 2011. "The Aftermath of a Long Decade of Real Nil Interest Rates (Spain 1996–2008)," Chapters, in: Óscar Dejuán & Eladio Febrero & Maria Cristina Marcuzzo (ed.), The First Great Recession of the 21st Century, chapter 14, Edward Elgar Publishing.
    8. Genius, Margarita & Tzouvelekas, Vangelis, 2008. "The Balassa-Samuelson Productivity Bias Hypothesis: Further Evidence Using Panel Data," Agricultural Economics Review, Greek Association of Agricultural Economists, vol. 9(2).
    9. Lenarčič, Črt & Masten, Igor, 2020. "Is there a Harrod-Balassa-Samuelson effect? New panel data evidence from 28 European countries," MPRA Paper 100647, University Library of Munich, Germany.
    10. Imed Drine & Christophe Rault, 2002. "Does the Balassa-Samuelson Hypothesis Hold for Asian Countries? An Empirical Analysis using Panel Data Cointegration Tests," William Davidson Institute Working Papers Series 504, William Davidson Institute at the University of Michigan.
    11. Óscar Dejuán & Eladio Febrero & Maria Cristina Marcuzzo (ed.), 2011. "The First Great Recession of the 21st Century," Books, Edward Elgar Publishing, number 14193.
    12. Javier Coto-Martinez & Juan C. Reboredo, 2004. "The Balassa-Samuelson effect in an imperfectly competitive economy: empirical evidence for G7 countries," Money Macro and Finance (MMF) Research Group Conference 2003 19, Money Macro and Finance Research Group.
    13. Coto-Martinez, J. & Reboredo, J. C., 2007. "The Relative Price of Non-traded Goods in an Imperfectly Competitive Economy: Empirical Evidence for G7 Countries," Working Papers 07/14, Department of Economics, City University London.
    14. Drine, I. & Rault, Ch., 2004. "Does the Balassa-Samuelson Hypothesis Hold for Asian Countries?. An Empirical Analysis using Panel Data and Cointegration Tests," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 4(4).
    15. Peltonen, Tuomas A. & Sager, Michael, 2009. "Productivity shocks and real exchange rate: a reappraisal," Working Paper Series 1046, European Central Bank.

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