Productivity and real exchange rates for India: does Balassa-Samuelson effect explain?
نویسندگان
چکیده
Purpose This study aims to explore the long-run equilibrium relationship between India’s real exchange rate and sectoral productivity trends using internationally comparable KLEMS databases on for India, China, Euro area, USA, UK Japan. Design/methodology/approach uses pooled mean group estimations panel data suggested by Pesaran et al. (1999). method is chosen because of presence variables with different orders integration. Findings The results find support an “extended” Balassa–Samuelson (BS) hypothesis which allows labour market frictions that does not allow wage equalisation traded non-traded sectors within a country. mechanism continues some when we separate out distribution sector comprises wholesale retail trade in domestic services sector. empirical evidence suggests anchored fundamentals closely aligned its fair value over medium long-time horizon. Originality/value To best authors’ knowledge, unlike available literature, aggregate per-capita income as proxy country’s growth, this paper perhaps makes first attempt validate BS accounting differential at levels across countries. Moreover, takes improvement rather than basket countries, prevalent practice literature. While data, witnessed prolonged appreciation effective rapid technological progress, authors believe findings policy implications could be applicable similar emerging economies.
منابع مشابه
Productivity, the Terms of Trade, and the Real Exchange Rate: The Balassa-Samuelson Hypothesis Revisited
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ژورنال
عنوان ژورنال: Indian Growth and Development Review
سال: 2023
ISSN: ['1753-8254', '1753-8262']
DOI: https://doi.org/10.1108/igdr-11-2022-0130