Balassa-Samuelson Effect in Transition Economies: The Case of Slovenia

27 Pages Posted: 19 Nov 2002

See all articles by Bostjan Jazbec

Bostjan Jazbec

University of Ljubljana - Faculty of Economics

Date Written: October 2002

Abstract

Paper presents a first-hand examination of the Balassa-Samuelson effect in Slovenia. Different measures of real exchange rate are presented in order to provide arguments for the Balassa-Samuelson effect estimation using 'external' real exchange rate measure. It is argued that on average one percent increase in productivity differential between labor productivities in industry and services appreciated 'external' real exchange rate by almost 1.5 percent in the period from 1993:1 to 2001:2. At the same time, one percent increase in productivity differential caused about 1.7 percent increase in CPI. The results are in line with other studies on real exchange rate behavior in transition economies.

Keywords: transition economies, real exchange rate, Balassa-Samuelson effect

JEL Classification: F31, F41, P22, P24

Suggested Citation

Jazbec, Bostjan, Balassa-Samuelson Effect in Transition Economies: The Case of Slovenia (October 2002). Available at SSRN: https://ssrn.com/abstract=346502 or http://dx.doi.org/10.2139/ssrn.346502

Bostjan Jazbec (Contact Author)

University of Ljubljana - Faculty of Economics ( email )

Kardeljeva ploscad 17
Ljubljana, 1000
Slovenia
+386 1 5892 623 (Phone)
+ 386 1 5892 698 (Fax)

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