Disaggregated Spending and the Productivity Bias Hypothesis

Goswami, Gour Gobinda

Disaggregated Spending and the Productivity Bias Hypothesis

Goswami, G. G. and Rahman, A. (2008). "Disaggregated Spending and the Productivity Bias Hypothesis", The Journal of Developing Areas, 41(2), 79-90.

13 Pages Posted: 18 May 2020

See all articles by Gour Gobinda Goswami

Gour Gobinda Goswami

North South University

Date Written: 2008

Abstract

According to the productivity bias hypothesis countries have a tendency for real appreciation in their domestic currency as a result of a productivity shock and the tendency is more pronounced in the non-tradable sectors. Balassa (1964) examines this thesis for 12 OECD countries in a cross section framework. This paper reexamines this empirically using a disaggregate data of consumption, investment, and government expenditures in a panel regression setup. Using five different panel specifications and controlling for country specific heterogeneity, time specific heterogeneity, and openness this paper explores that the bias is more prominent in government sector compared to other component of aggregate spending.

Keywords: Productivity Bias Hypothesis;PPP;Disaggregated Spending;Panel Data

JEL Classification: F3

Suggested Citation: Suggested Citation

Goswami, Gour Gobinda, Disaggregated Spending and the Productivity Bias Hypothesis (2008). Goswami, G. G. and Rahman, A. (2008). "Disaggregated Spending and the Productivity Bias Hypothesis", The Journal of Developing Areas, 41(2), 79-90., Available at SSRN: https://ssrn.com/abstract=3573440