3,424 research outputs found
Price Convergence: What Can the Balassa-Samuelson Model Tell Us? (in English)
No full textThe article contributes to the theory of convergence in the price level and relative prices. The authors present a model integrating the Balassa-Samuelson model of real equilibrium exchange rate with a model of capital accumulation and with the demand side of the economy. They also show how the Balassa-Samuelson model can be extended to the case of more than two goods. The predictions of the Balassa-Samuelson model are generally consistent with empirical findings in Central and Eastern European countries. The authors show how the model can be used toward projecting price convergence in a transition economy.inflation; relative prices; Balassa-Samuelson model
Price Convergence: What Can the Balassa-Samuelson Model Tell Us?
No full textThe paper provides a theoretical reference point for discussions on adjustments in price levels and relative prices. The authors present a 'nested' model integrating the Balassa-Samuelson model of the real equilibrium exchange rate with a model of accumulation of capital and with the demand side of the economy. Consequently, they show how the model can be generalised to a case of numerous commodities with different degrees of tradability. The predictions of the model are generally consistent with empirical findings for Central and Eastern European countries. The authors show how the theoretical model can be used for internally consistent simulations of the future convergence process in a transition economy.Balassa-Samuelson model, inflation, relative prices.
The Balassa-Samuelson model in general equilibrium with markup variations
No full textThis contribution embeds the Balassa-Samuelson hypothesis in a general equilibrium model that combines monopolistic competition and markup variations to examine the determinants of relative prices of nontradables. The model emphasizes the role of markup variations as an important aspect driving relative price movements. Variations in the markup makes fiscal policy non-neutral and provides a strong magnification mechanism for shocks to productivity. The empirical evidence of these predictions are examined by using a panel cointegration framework. On the whole, the econometric findings support theoretical implications, suggesting that our model is more closely in line with data relative to the supply-side Balassa-Samuelson framework that abstracts from variations in the degree of competition.Balassa-Samuelson effect, Monopolistic competition, Fiscal policy.
Balassa-Samuelson Effect Approaching Fifty Years: Is it Retiring Early in Australia?
No full textThis paper tests empirically the Balassa-Samuelson (BS) hypothesis using annual data for Australia. We applied the ARDL cointegration technique developed by Pesaran et al. (2001) and found evidence of a significant long-run relationship between real exchange rate and Australia-US productivity differential during the period of 1950-2003. We found that a one per cent increase in labour productivity in Australia relative to the US will lead to 5.6 per cent appreciation in the real exchange rate of Australia. We suspect that the elasticity coefficient is “over-estimated” due to the exclusion of relevant explanatory variables. The dynamics and the determinants of the real exchange rate movements are numerous; they include terms of trade, interest rate differentials, net foreign liabilities among others along with labour productivity differential.Real Exchange Rate, Balassa-Samuelson hypothesis, Unit-root, Structural break and ARDL.
The Penn-Belassa-Samuelson Effect in Developing Countries: Price and Income Revisited
No full textIt is conventional wisdom that richer countries have a higher price level than poorer countries. This paper provides evidence that the price-income relationship is non-linear and that it turns negative, or at best flat, in low income countries. The result is robust along both cross-section and time-series dimensions. Additional robustness checks show that biases in PPP estimation and measurement error in low-income countries do not drive the result.Balassa-Samuelson, Penn effect, developing countries, non-parametricestimation, purchasing power parity, real exchange rate
DOES THE STOLPER-SAMUELSON THEOREM HOLD WITH LESS TRADE DISTORTION?: A COMPUTABLE GENERAL EQUILIBRIUM
No full textThis paper examines the effects of agricultural trade policy changes in the Brazilian agriculture using CGE model. An extended Salter-Swan model is employed to verify if the Stolper-Samuelson theorem holds and the consequences in terms of prices, production and resources allocation. Results show that the Stolper-Samuelson hypothesis is reversed when imports and domestic goods are poor substitutes. The reduction in the import tariff increases national income, implying that inappropriate trade policy adjustments can stand in the way of promoting rapid and equitable growth of the economy.Stolper-Samuelson theorem, CGE model, trade distortion, Brazilian agriculture., International Relations/Trade,
Troisième Congrès de l'Association internationale des Sciences économiques- L'avenir des relations économiques internationales, présenté par P.A Samuelson, préparé par R. Mosse.
No full textLavagne Pierre. Troisième Congrès de l'Association internationale des Sciences économiques- L'avenir des relations économiques internationales, présenté par P.A Samuelson, préparé par R. Mosse.. In: Revue économique, volume 24, n°3, 1973. pp. 525-526
On Samuelson Submanifolds in Four Space
No full textThe object of study in this talk is a general class of submanifolds of R^4. The motivation for this work was the derivation of the following equation which answered a question posed by the distinguished economist P.A. Samuelson
Troisième Congrès de l'Association internationale des Sciences économiques- L'avenir des relations économiques internationales, présenté par P.A Samuelson, préparé par R. Mosse.
No full textLavagne Pierre. Troisième Congrès de l'Association internationale des Sciences économiques- L'avenir des relations économiques internationales, présenté par P.A Samuelson, préparé par R. Mosse.. In: Revue économique, volume 24, n°3, 1973. pp. 525-526
The Harrod-Balassa-Samuelson Hypothesis: Real Exchange Rates and their Long-Run Equilibrium
No full textFrictionless, perfectly competitive traded-goods markets justify thinking of purchasing power parity (PPP) as the main driver of exchange rates in the long-run. But differences in the traded/non-traded sectors of economies tend to be persistent and affect movements in local price levels in ways that upset the PPP balance (the underpinning of the Harrod-Balassa-Samuelson hypothesis, HBS). This paper uses panel-data techniques on a broad collection of countries to investigate the long-run properties of the PPP/HBS equilibrium using novel local projection methods for cointegrated systems. These semi-parametric methods isolate the long-run behavior of the data from contaminating factors such as frictions not explicitly modelled and thought to have effects only in the short-run. Absent the short-run effects, we find that the estimated speed of reversion to long-run equilibrium is much higher. In addition, the HBS effects means that the real exchange rate is converging not to a steady mean, but to a slowly to a moving target. The common failure to properly model this effect also biases the estimated speed of reversion downwards. Thus, the so-called "PPP puzzle" is not as bad as we thought.
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