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Title:The Balassa-Samuelson Hypothesis in Developed Countries and Emerging Market Economies: Different Outcomes Explained PDF Logo
Authors:García Solanes, José
Torrejón-Flores, Fernando
Issue Date:2009
Citation:[Journal:] Economics: The Open-Access, Open-Assessment E-Journal [Volume:] 3 [Issue:] 2009-2 [Pages:] 1-24 [DOI/URN:] doi:10.5018/economics-ejournal.ja.2009-2
Abstract:This paper studies the Balassa-Samuelson effects in two areas with strong differences in economic development, sixteen OECD countries and sixteen Latin American economies. The USA is taken as a benchmark. Applying recent panel cointegration and bootstrapping techniques that solve for cross-sectional dependence and small panel size problems, we find some evidence for not rejecting the whole hypothesis in the LA area. In the context of OECD group, the second stage of the BS hypothesis, which relates relative sector prices with the real exchange rate, does not hold, probably because national markets remain to some extent segmented, as reflected in departures from PPP in the tradable sectors.
Subjects:Balassa-Samuelson effect
panel cointegration
cross-sectional dependence
bootstrap
economic development
JEL:F31
C15
E31
Persistent Identifier of the first edition:doi:10.5018/economics-ejournal.ja.2009-2
Creative Commons License:http://creativecommons.org/licenses/by-nc/2.0/de/deed.en
Document Type:Article
Appears in Collections:Economics: The Open-Access, Open-Assessment E-Journal - Journal Articles

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