Catching-up and inflation in transition economies: the Balassa-Samuelson effect revisited
AbstractThis paper estimates the Balassa-Samuelson effects for 11 countries in central and eastern Europe on a disaggregated set of quarterly data covering the period from the mid-1990s to the first quarter of 2008. The Balassa-Samuelson effects are clearly present and explain around 24% of inflation differentials vis-à-vis the euro area (about 1.2 percentage points on average); and around 84% of domestic relative price differentials between non-tradables and tradables; or about 16% of total domestic inflation (about 1.1 percentage points on average). The paper presents mixed evidence on whether the Balassa-Samuelson effects have declined since 2001 compared with the second half of the 1990s.
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Bibliographic InfoPaper provided by Bank for International Settlements in its series BIS Working Papers with number 270.
Length: 26 pages
Date of creation: Dec 2008
Date of revision:
Balassa-Samuelson effect; productivity; inflation; transition; convergence; European monetary union; Maastricht criteria;
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-01-31 (All new papers)
- NEP-CBA-2009-01-31 (Central Banking)
- NEP-EEC-2009-01-31 (European Economics)
- NEP-MAC-2009-01-31 (Macroeconomics)
- NEP-MON-2009-01-31 (Monetary Economics)
- NEP-OPM-2009-01-31 (Open Economy Macroeconomic)
- NEP-TRA-2009-01-31 (Transition Economics)
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