The Price of Development: the Penn-Balassa-Samuelson effect revisited∗

The Penn-Balassa-Samuelson Effect in Developing Countries: Price and Income Revisited

It 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 measuremen...

Productivity, the Terms of Trade, and the Real Exchange Rate: The Balassa-Samuelson Hypothesis Revisited

The data of GDP and exchange rate used in the Balassa–Samuelson hypothesis

This article introduces the data of the log real GDP per capita ratio and the log real exchange rate which are used to revisit the Balassa-Samuelson Hypothesis. We acquired the data from IMF and World Bank database, and provide the name and source of the data. All data are openly accessible. Besides, we describe the value of data as well as the method to process the data which can also be found...

Real currency appreciation in accession countries: Balassa-Samuelson and investment demand

The Balassa-Samuelson effect is usually seen as the prime explanation of the continuous real appreciation of central and east European (CEE) transition countries' currencies against their western counterparts. The response of a small country's real exchange rate to various shocks is derived in a simple model. It is shown that productivity shocks work not only through a Balassa-type supply chann...

The Harrod - Balassa - Samuelson Hypothesis : Real Exchange Rates and their Long - Run Equilibrium

Frictionless, 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 p...