Assessment of the Balassa-Samuelson Effect in Croatia
The main objective of this paper is to assess the importance of the Balassa-Samuelson effect in Croatia and to quantify its influence on inflation and the real exchange rate.The productivity growth differential between tradable and ontradable sectors within a given country compared to abroad has rec...
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Institute of Public Finance
2007-12-01
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Online Access: | http://www.ijf.hr/eng/FTP/2007/4/funda.pdf |
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doaj-2de7f1e81d0c43a5b842864066b948442020-11-24T23:39:03ZengInstitute of Public FinanceFinancial Theory and Practice1846-887X1845-97572007-12-01314321351Assessment of the Balassa-Samuelson Effect in CroatiaIgor LjubajGorana LukinićJosip FundaThe main objective of this paper is to assess the importance of the Balassa-Samuelson effect in Croatia and to quantify its influence on inflation and the real exchange rate.The productivity growth differential between tradable and ontradable sectors within a given country compared to abroad has recently often been used to explain the real appreciation of Central and East European (CEE) transition countries’ currencies against euro, and also to explain the inflation differential between the aforementioned countries and the euro area. Since all new EU member states are obligated to introduce the euro as the national currency, the Balassa-Samuelson effect associated with real convergence could impede nominal convergence and fulfilment of the necessary Maastricht criteria. The main conclusion of this paper is that in the period from 1998:Q1 to 2006:Q3 the Balassa-Samuelson effect in Croatia was not statistically significant, so it should not constitute a barrier to meeting convergence criteria.http://www.ijf.hr/eng/FTP/2007/4/funda.pdfBalassa-Samuelson effecttradables and nontradablesrelative pricesproductivityinflationreal exchange rateCroatia |
collection |
DOAJ |
language |
English |
format |
Article |
sources |
DOAJ |
author |
Igor Ljubaj Gorana Lukinić Josip Funda |
spellingShingle |
Igor Ljubaj Gorana Lukinić Josip Funda Assessment of the Balassa-Samuelson Effect in Croatia Financial Theory and Practice Balassa-Samuelson effect tradables and nontradables relative prices productivity inflation real exchange rate Croatia |
author_facet |
Igor Ljubaj Gorana Lukinić Josip Funda |
author_sort |
Igor Ljubaj |
title |
Assessment of the Balassa-Samuelson Effect in Croatia |
title_short |
Assessment of the Balassa-Samuelson Effect in Croatia |
title_full |
Assessment of the Balassa-Samuelson Effect in Croatia |
title_fullStr |
Assessment of the Balassa-Samuelson Effect in Croatia |
title_full_unstemmed |
Assessment of the Balassa-Samuelson Effect in Croatia |
title_sort |
assessment of the balassa-samuelson effect in croatia |
publisher |
Institute of Public Finance |
series |
Financial Theory and Practice |
issn |
1846-887X 1845-9757 |
publishDate |
2007-12-01 |
description |
The main objective of this paper is to assess the importance of the Balassa-Samuelson effect in Croatia and to quantify its influence on inflation and the real exchange rate.The productivity growth differential between tradable and ontradable sectors within a given country compared to abroad has recently often been used to explain the real appreciation of Central and East European (CEE) transition countries’ currencies against euro, and also to explain the inflation differential between the aforementioned countries and the euro area. Since all new EU member states are obligated to introduce the euro as the national currency, the Balassa-Samuelson effect associated with real convergence could impede nominal convergence and fulfilment of the necessary Maastricht criteria. The main conclusion of this paper is that in the period from 1998:Q1 to 2006:Q3 the Balassa-Samuelson effect in Croatia was not statistically significant, so it should not constitute a barrier to meeting convergence criteria. |
topic |
Balassa-Samuelson effect tradables and nontradables relative prices productivity inflation real exchange rate Croatia |
url |
http://www.ijf.hr/eng/FTP/2007/4/funda.pdf |
work_keys_str_mv |
AT igorljubaj assessmentofthebalassasamuelsoneffectincroatia AT goranalukinic assessmentofthebalassasamuelsoneffectincroatia AT josipfunda assessmentofthebalassasamuelsoneffectincroatia |
_version_ |
1725514837817032704 |