Record Details

Real Exchange Rates Determination: Purchasing Power Parity (PPP), and Balassa-Samuelson Hypothesis

Journal of Eastern European and Central Asian Research

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Field Value
 
Title Real Exchange Rates Determination: Purchasing Power Parity (PPP), and Balassa-Samuelson Hypothesis
 
Creator Petkov, Boris T; University of Birmingham
 
Subject Economics
Central Asia, economic development
HB1-3840, HB135-147
 
Description The Balassa and Samuelson hypothesis -- BS -- (Balassa, 1964, Samuelson, 1964), which natural point of departure is the Salter-Swan (dependent economy) model is analysed. It offers general theoretical justification of the long-run trends in real exchange rates in relation to productivities and prices. This is to say, that taking into consideration the important real world feature of having both tradable and non-tradable goods BS states that if a given country’s productivity in producing tradable goods compared to its productivity in making non-tradable goods and services rises more rapidly than in a (certain) foreign country, then the home country real exchange rate will experience appreciation. Thus if productivity of factors of production grows faster in the home country tradable sector, then relative price in the non-tradable sector should rise. Furthermore, we provide supporting illustrative evidence by empirically assessing the BS effect for Azerbaijan.
 
Publisher Institute of Eastern Europe and Central Asia
 
Date 2017-04-23
 
Type info:eu-repo/semantics/article
Peer-reviewed Articles
info:eu-repo/semantics/publishedVersion
 
Format application/pdf
 
Identifier http://ieeca.org/journal/index.php/JEECAR/article/view/147
10.15549/jeecar.v4i1.147
 
Source Journal of Eastern European and Central Asian Research (JEECAR); Vol 4, No 1 (2017): Journal of Eastern European and Central Asian Research; 11
 
Language eng
 
Relation http://ieeca.org/journal/index.php/JEECAR/article/view/147/pdf_1
 
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