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More Evidence in Favor of the Balassa-Samuelson Hypothesis

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  • DeLoach, Stephen B

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. Copyright 2001 by Blackwell Publishing Ltd.

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Bibliographic Info

Article provided by Wiley Blackwell in its journal Review of International Economics.

Volume (Year): 9 (2001)
Issue (Month): 2 (May)
Pages: 336-42

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Handle: RePEc:bla:reviec:v:9:y:2001:i:2:p:336-42

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Citations

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Cited by:
  1. Jorge Carrera & Romain Restout, 2008. "Long Run Determinants of Real Exchange Rates in Latin America," Working Papers 0811, Groupe d'Analyse et de Théorie Economique (GATE), Centre national de la recherche scientifique (CNRS), Université Lyon 2, Ecole Normale Supérieure.
  2. Clements, Kenneth & Lan, Yihui & Roberts, John, 2008. "Exchange-rate economics for the resources sector," Resources Policy, Elsevier, vol. 33(2), pages 102-117, June.
  3. 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).
  4. Peltonen, Tuomas A. & Sager, Michael, 2009. "Productivity shocks and real exchange rate: a reappraisal," Working Paper Series 1046, European Central Bank.
  5. Christoph Fischer, 2004. "Real currency appreciation in accession countries: Balassa-Samuelson and investment demand," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 140(2), pages 179-210, June.
  6. Pashourtidou, Nicoletta, 2003. "Omitted variables in cointegration analysis," Discussion Paper Series In Economics And Econometrics 0304, Economics Division, School of Social Sciences, University of Southampton.
  7. 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, Research Centre.
  8. Kirsten Lommatzsch & Silke Tober, 2004. "The Inflation Target of the ECB: Does the Balassa-Samuelson Effect Matter?," EUI-RSCAS Working Papers 19, European University Institute (EUI), Robert Schuman Centre of Advanced Studies (RSCAS).
  9. 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.
  10. 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, 07.
  11. Bardhan, Ashok Deo & Edelstein, Robert H. & Leung, Charles, 2004. "A note on globalization and urban residential rents," Journal of Urban Economics, Elsevier, vol. 56(3), pages 505-513, November.
  12. Fischer, Christoph, 2004. "PPP: a Disaggregated View," Discussion Paper Series 1: Economic Studies 2004,07, Deutsche Bundesbank, Research Centre.
  13. Mahmood-ur- Rahman & Sujan Kumar Ghosh, 2013. "Productivity Bias Hypothesis: The Case of South Asia," Economics Bulletin, AccessEcon, vol. 33(3), pages 1771-1779.
  14. Mohsen Bahmani-Oskooee & Gour G. Goswami, 2003. "Smuggling As Another Cause Of Failure Of The Ppp," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 28(2), pages 23-38, December.
  15. 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.
  16. 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.
  17. Imed Drine & Christophe Rault, 2005. "Can the Balassa-Samuelson theory explain long-run real exchange rate movements in OECD countries?," Applied Financial Economics, Taylor & Francis Journals, vol. 15(8), pages 519-530.

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