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The Balassa-Samuelson Effect in the Bulgarian Economy

Author

Listed:
  • Georgi Chukalev

    (Agency for Economic Analysis and Forecasting)

Abstract

This research studies the influence of the Balassa-Samuelson effect on Bulgarian inflation and the real appreciation of BGN in relation to main trade partners currencies. According to the results obtained, the Balassa-Samuelson hypothesis stands for the Bulgarian economy. The higher rate of tradable sector productivity in Bulgaria brings about adjustment of wages and prices to EU countries levels. Thus the assumed sustainable GDP growth would still evoke higher inflation rates in Bulgaria compared to EU. Additional effects on Bulgarian inflation rates would have the conclusion of price liberalization and excises harmonization.

Suggested Citation

  • Georgi Chukalev, 2002. "The Balassa-Samuelson Effect in the Bulgarian Economy," Working paper series 22002en, Agency for Economic Analysis and Forecasting.
    • Handle: RePEc:eaf:wpaper:22002en
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    References listed on IDEAS

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    5. International Monetary Fund, 2001. "Interpreting Real Exchange Rate Movements in Transition Countries," IMF Working Papers 2001/056, International Monetary Fund.
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    7. Willem H. Buiter & Clemens Grafe, 2001. "Central Banking and the Choice of Currency Regime in Accession Countries," SUERF Studies, SUERF - The European Money and Finance Forum, number 11 edited by Morten Balling, May.
    8. Mr. Paul R Masson, 1999. "Monetary and Exchange Rate Policy of Transition Economies of Central and Eastern Europe after the Launch of EMU," IMF Policy Discussion Papers 1999/005, International Monetary Fund.
    9. Mr. Tomás Holub & Mr. Martin Cihak, 2001. "Convergence of Relative Prices and Inflation in Central and Eastern Europe," IMF Working Papers 2001/124, International Monetary Fund.
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    Cited by:

    1. Muhammad Khan, 2013. "Inflation and Sectoral Output Growth Variability in Bulgaria," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 55(4), pages 687-704, December.
    2. Todorov Ivan Krumov, 2014. "Macroeconomic Trends in the New Member Countries of the European Union Before the Euro Area Debt Crisis," Scientific Annals of Economics and Business, Sciendo, vol. 61(2), pages 197-217, December.
    3. Dubravko Mihaljek & Marc Klau, 2008. "Catching-up and inflation in transition economies: the Balassa-Samuelson effect revisited," BIS Working Papers 270, Bank for International Settlements.

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    Keywords

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    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation

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