Labor Productivity and Real Exchange Rate: The Balassa-Samuelson Disconnect in the Former Yugoslav Republic of Macedonia

 
Author/Editor: Loko, Boileau ; Tuladhar, Anita
 
Publication Date: June 01, 2005
 
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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.
 
Series: Working Paper No. 05/113
Subject(s): Productivity | Yugoslavia | Labor markets | Real effective exchange rates | Yugoslavia, Federal Republic of

Author's Keyword(s): Real exchange rate | productivity | Balassa-Samuelson
 
English
Publication Date: June 01, 2005
ISBN/ISSN: 1934-7073 Format: Paper
Stock No: WPIEA2005113 Pages: 21
Price:
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