IDEAS home Printed from
   My bibliography  Save this article

The real exchange rate and productivity differentials: a panel cointegration approach


  • Vishal Jaunky


Balassa (1964) and Samuelson (1964) have expressed the view that economic development is normally accompanied by a real exchange rate appreciation. The aim of the study is twofold: first, we investigate whether the Balassa-Samuelson (BS) hypothesis holds, and second we appraise the performance of the commonly used productivity differentials proxy. Results from the Prais and Winsten (1954), Im, Pesaran and Shin (2003) and McCoskey and Kao (2001) panel data techniques suggest that it is legitimate to consider the BS hypothesis at different stages of economic development. Additionally, the proxy works quite well.

Suggested Citation

  • Vishal Jaunky, 2007. "The real exchange rate and productivity differentials: a panel cointegration approach," Applied Economics Letters, Taylor & Francis Journals, vol. 15(4), pages 313-318.
  • Handle: RePEc:taf:apeclt:v:15:y:2007:i:4:p:313-318
    DOI: 10.1080/13504850500461670

    Download full text from publisher

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

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    1. S. Micossi & Gian M Milesi-Ferretti, 1994. "Real Exchange Rates and the Prices of Nontradable Goods," IMF Working Papers 94/19, International Monetary Fund.
    2. Egert, Balazs & Drine, Imed & Lommatzsch, Kirsten & Rault, Christophe, 2003. "The Balassa-Samuelson effect in Central and Eastern Europe: myth or reality?," Journal of Comparative Economics, Elsevier, vol. 31(3), pages 552-572, September.
    Full references (including those not matched with items on IDEAS)

    More about this item


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:apeclt:v:15:y:2007:i:4:p:313-318. 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: (Chris Longhurst). General contact details of provider: .

    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 CitEc recognized a reference but did not link an item in RePEc 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 RePEc Author Service 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.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.