The Balassa-Samuelson Effect Reversed: New Evidence from OECD Countries

Sax, Christoph and Gubler, Matthias. (2011) The Balassa-Samuelson Effect Reversed: New Evidence from OECD Countries. WWZ Discussion Papers, 2011 (09). Basel.

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Official URL: http://edoc.unibas.ch/dok/A6043646

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This paper explores the robustness of the Balassa-Samuelson (BS) hypothesis. We analyze a panel of OECD countries from 1970 to 2008 and compare three different datasets on sectoral productivity, including a newly constructed database on total factor productivity. Overall, our DOLS estimation results do not support the BS hypothesis. For the last two decades, we find a very robust negative relationship between the productivity in the tradable sector and the equilibrium real exchange rate, in contrast to BS. Earlier supportive findings depend strongly on the choice of the dataset. Except for the terms of trade, the explanatory power of other variables is weak.
Faculties and Departments:06 Faculty of Business and Economics > Departement Wirtschaftswissenschaften > Professuren Wirtschaftswissenschaften > Aussenwirtschaft und Europ. Integration (Weder)
12 Special Collections > WWZ Publications > WWZ Discussion Papers and Working Papers
UniBasel Contributors:Sax, Christoph
Item Type:Working Paper
Note: -- Publication type according to Uni Basel Research Database: Discussion paper / Internet publication
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  • handle: RePEc:bsl:wpaper:2011/09
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Last Modified:13 Mar 2018 14:24
Deposited On:19 Jul 2013 07:37

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