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2010 | 58 | 7 | 657-676
Article title

THE EFFECT OF LABOR PRODUCTIVITY ON REAL EXCHANGE RATE: EVIDENCE FROM CZECH REPUBLIC, HUNGARY, POLAND AND SLOVAKIA

Authors
Title variants
Languages of publication
EN
Abstracts
EN
The paper builds on an inter-temporal model of an open economy to formulate the hypothesis of the dependence of real exchange rate on labour productivity. The model is formulated under those assumption on which rests the Balassa-Samuelson theorem. The hypothesis is tested using co-integration technique and vector error correction model. Usually, testing the Balassa-Samuelson effect gives mixed results, sometimes finding the opposite reaction of the real exchange rate to the one predicted by the Balassa-Samuelson theorem, pointing to the restrictive nature of the assumptions on which it is based. The analysis shows a little supportive evidence for the Balassa-Samuelson effect. However, according to the analysis the effect of labour productivity on the real exchange rate can hardly be considered as clear-cut as predicted by the Balassa-Samuelson theorem.
Contributors
  • Vit Posta, Ekonomicka univerzita Praha, Fakulta podnikohospodarska, Katedra mikroekonomiky, ul. W. Churchilla 4, 130 67 Praha 3, Czech Republic
References
Document Type
Publication order reference
Identifiers
CEJSH db identifier
11SKAAAA100928
YADDA identifier
bwmeta1.element.a5a667bf-6b58-3630-aa90-74128ec9e5f0
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