Balassa-Samuelson effect

"results do not show supportive evidence for the Balassa-Samuelson effect in the long run."

Most professional economists accept that the Balassa-Samuelson effect model has some merit.

The Balassa-Samuelson effect occurs when productivity-increases affect the real exchange rate.

(this is a good source of further links to the academic Balassa-Samuelson effect discussion.)

The top party leaders probably haven't heard of the Balassa-Samuelson effect, which explains that currencies rise as countries get richer.

The (naïve form of the) purchasing power parity hypothesis argues that the Balassa-Samuelson effect shouldn't occur.

Balassa is most famous for his work on the relationship between purchasing power parity and cross-country productivity differences (the Balassa-Samuelson effect).

The Balassa-Samuelson effect depends on inter-country differences in the relative productivity of the tradable and non-tradable sectors.

Since Hungary is in the process of catching up (Balassa-Samuelson effect), the long-term objective is a slightly higher figure, around 2.3-3.2%.

In 1964 the modern theoretical interpretation was set down as the Balassa-Samuelson effect, with studies since then consistently confirming the original Penn effect.

The Balassa-Samuelson effect argues that the law of one price is not applicable to all goods internationally, because some goods are not tradable.

The Balassa-Samuelson effect model was developed independently in 1964 by Béla Balassa and Paul Samuelson.

The Balassa-Samuelson effect describes the effect of variable Solow residuals: it assumes that mass-produced traded goods have a higher residual than does the service sector.

The simplest model which generates a Balassa-Samuelson effect has two countries, two goods (one tradable, and a country specific nontradable) and one factor of production, labor.

International economics, where he influenced the development of two important international trade models: the Balassa-Samuelson effect, and the Heckscher-Ohlin model (with the Stolper-Samuelson theorem).

The "Balassa-Samuelson effect" is a model cited as the principal cause of the Penn effect by neo-classical economics, as well as being a synonym of "Penn effect".

Partly because empirical findings have been mixed, and partly to differentiate the model from its conclusion, modern papers tend to refer to the Balassa-Samuelson hypothesis, rather than the Balassa-Samuelson effect.

The International Association for Research in Income and Wealth's Product Price Differences across Countries (2004) traces the history of the qualitative description given by the Balassa-Samuelson effect back to David Ricardo.

Going from country to country, the distribution of prices within the basket will vary; typically, non-tradable purchases will consume a greater proportion of the basket's total cost in the higher GDP country, per the Balassa-Samuelson effect.

He is also known for his International Economics, a former standard textbook, the first edition of which contained some observations and ruminations (wanting in subsequent editions) that would foreshadow theories developed independently by later scholars (such as the Balassa-Samuelson effect).

The Balassa-Samuelson effect might be one reason to oppose this trade theory, because it predicts that: a GDP gain in traded goods does not lead to as much of an improvement in the living standard as an equal GDP increase in the non-traded sector.

The relative price differential between tradables and non-tradables from high-income to low-income countries is a consequence of the Balassa-Samuelson effect and gives a big cost advantage to labour intensive production of tradable goods in low income countries (like Ethiopia), as against high income countries (like Switzerland).

Among other uses, PPP rates facilitate international comparisons of income, as market exchange rates are often volatile, are affected by political and financial factors that do not lead to immediate changes in income and tend to systematically understate the standard of living in poor countries, due to the Balassa-Samuelson effect.