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

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  • García-Solanes, José
  • Sancho-Portero, F. Israel
  • Torrejón-Flores, Fernando

Abstract

This paper analyses the Balassa and Samuelson hypothesis in two groups of countries: six new member states (NMSs) of the EU and six old member states (OMSs) not affected by the transition problems. We find that in the NMS group, the model may be successfully enlarged with variables that account for both quality improvements in the tradable sector and increases in the demand for domestic tradable goods. In the OMS panel, the model fails because national markets of tradable goods remain segmented, probably due to political interests, imperfect competition and transportation costs.

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Bibliographic Info

Article provided by Elsevier in its journal Economic Systems.

Volume (Year): 32 (2008)
Issue (Month): 1 (March)
Pages: 17-32

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Handle: RePEc:eee:ecosys:v:32:y:2008:i:1:p:17-32

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Cited by:
  1. García Solanes, José & Torrejón-Flores, Fernando, 2009. "The Balassa-Samuelson Hypothesis in Developed Countries and Emerging Market Economies: Different Outcomes Explained," Economics - The Open-Access, Open-Assessment E-Journal, Kiel Institute for the World Economy, vol. 3(2), pages 1-24.
  2. Mirjana Miletic, 2012. "Estimating the Impact of the Balassa-Samuelson Effect in Central and Eastern European Countries: A Revised Analysis of Panel Data Cointegration Tests," Working papers 22, National Bank of Serbia.

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