IDEAS home Printed from
MyIDEAS: Log in (now much improved!) to save this article

The Balassa-Samuelson Hypothesis in Estonia: Oil Shale, Tradable Goods, Regulated Prices and Other Culprits

Listed author(s):
  • Balázs Egert

This paper analyses the Balassa-Samuelson (B-S) framework for the case of Estonia using a unique dataset that consists of a 15-sectoral breakdown of GDP and a five-digit level CPI disaggregation with 260 items over the period from 1993 to 2002. Unlike the existing literature, the paper focuses on the following four aspects of the phenomenon: (a) data disaggregation, (b) definition of goods tradability, (c) price regulatedness in services and (d) possible heterogeneity across transition countries. It turns out that the first three aspects do matter and, in addition to this, Estonia appears to bear very specific characteristics when compared with other transition countries. A battery of cointegration techniques (DOLS, ARDL, Johansen) shows that productivity is strongly related to relative prices only when regulated prices are controlled for appropriately in the consumer price index and when country-specific classification is applied to the open and closed sectors. The B-S effect contributed to CPI by 1 to 1.5 per cent at the outset of the period and by 0.4 to 0.6 per cent in 2002, whereas its potential long-run impact is estimated to be 1 to 1.2 per cent. Although real appreciation due to the B-S effect seems higher in the early 1990s, it explains that better real appreciation occurred in recent years. Copyright Blackwell Publishing Ltd 2005.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL:
File Function: link to full text
Download Restriction: Access to full text is restricted to subscribers.

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Article provided by Wiley Blackwell in its journal The World Economy.

Volume (Year): 28 (2005)
Issue (Month): 2 (February)
Pages: 259-286

in new window

Handle: RePEc:bla:worlde:v:28:y:2005:i:2:p:259-286
Contact details of provider: Web page:

Order Information: Web:

No references listed on IDEAS
You can help add them by filling out this form.

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:bla:worlde:v:28:y:2005:i:2:p:259-286. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Wiley-Blackwell Digital Licensing)

or (Christopher F. Baum)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.