Labor productivity and real exchange rate : the Balassa-Samuelson disconnect in the former Yugoslav Republic of Macedonia / prepared by Boileau Loko and Anita Tuladhar
Published
[Washington, D.C.] : International Monetary Fund, Policy Development and Review Dept. and European Department, 2005
Contents -- I. INTRODUCTION -- II. STYLIZED FACTS -- III. IS THERE A BALASSA-SAMUELSON EFFECT AT PLAY IN FYR MACEDONIA? -- IV. WHY PPP FAILS -- V. CONCLUSION AND POLICY IMPLICATIONS -- APPENDIX Estimating the Equilibrium Real Effective Exchange Rate -- REFERENCES
Summary
This paper seeks to investigate the transmission mechanisms linking productivity to the real exchange rate in the former Yugoslav Republic of Macedonia. At first glance, the stylized facts-low labor productivity growth and a trend real depreciation-suggest that a Balassa- Samuelson effect is in play. We find that the relationship between the two is not a result of the traditional Balassa-Samuelson effect. Instead, the depreciation of the real exchange rate reflects mainly the behavior of prices in the tradable sector. We argue that the depreciating real exchange rate may reflect a prolonged transition associated with slow technological growth and the low quality of the country's tradable-goods basket
Notes
"June 2005."
Bibliography
Includes bibliographical references (pages 20-21)
Notes
English
Online resource; title from title screen (viewed on June 11, 2008)
