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Competitiveness in Transition Economies: What Scope for Real Appreciation?

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  • Kornélia Krajnyák

    (International Monetary Fund)

  • Jeromin Zettelmeyer

    (International Monetary Fund)

Abstract

We estimate equilibrium dollar wages for 15 transition economies of Central and Eastern Europe (CEE) and the former Soviet Union. Equilibrium dollar wages are interpreted as full employment wages consistent with a country's physical and human capital endowment, and estimated by regressing actual dollar wages on productivity and human capital proxies in a short (1990-95) panel of 85 countries. The main results are: (1) equilibrium dollar wages have appreciated steadily in the Baltic countries and fast-reforming CEE transition economies, but have been flat in most CIS countries; and (2) 1996 actual dollar wages remain below estimated equilibrium dollar wages for most but not all transition countries covered.

Suggested Citation

  • Kornélia Krajnyák & Jeromin Zettelmeyer, 1998. "Competitiveness in Transition Economies: What Scope for Real Appreciation?," IMF Staff Papers, Palgrave Macmillan, vol. 45(2), pages 309-362, June.
    • Handle: RePEc:pal:imfstp:v:45:y:1998:i:2:p:309-362
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    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
    • P20 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - General
    • P50 - Political Economy and Comparative Economic Systems - - Comparative Economic Systems - - - General

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