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Productivity Differentials and The Real Exchange Rate: Empirical Evidence From India


  • Purna Chandra Parida

    (Institute for social and Economic Change)

  • B Kamaiah
  • Maathai K Mathiyazhagan


This paper examines the long-run relationship between the real exchange rate and productivity differentials on traded and non-traded goods in India and Japan by using the data relating to the period from 1974 to 1998. The study uses the co-integration technique and finds that there is an evidence for the Balassa-Samuelson hypothesis, which stipulates that productivity differences in the traded and non-traded goods have a stable long-run equilibrium relationship with real exchange rate.

Suggested Citation

  • Purna Chandra Parida & B Kamaiah & Maathai K Mathiyazhagan, 2001. "Productivity Differentials and The Real Exchange Rate: Empirical Evidence From India," Working Papers 99, Institute for Social and Economic Change, Bangalore.
  • Handle: RePEc:sch:wpaper:99

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