Competitiveness in Transition Economies: What Scope for Real Appreciation?
November 1, 1997
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Summary
This paper estimates equilibrium dollar wages for 15 transition economies. Equilibrium dollar wages are interpreted as full employment wages consistent with a country’s physical and human capital endowment, and estimated by regressing actual dollar wages on productivity and human capital proxies in a short (1990-95) panel of 85 countries. The main results are: (i) equilibrium dollar wages have appreciated steadily in the Baltic countries and fast-reforming Central and Eastern European (CEE) transition economies, but have been flat in most CIS countries; and (ii) 1996 actual dollar wages remain below estimated equilibrium dollar wages for most but not all transition countries covered.
Subject: Competition, Financial markets, Foreign exchange, Human capital, Labor, Production, Productivity, Real exchange rates, Wages
Keywords: Baltics, Central and Eastern Europe, Competition, current account, dollar wage, Eastern Europe, equilibrium wage, exchange rate, Human capital, price level, Productivity, Real exchange rates, transition economy, Wages, WP
Pages:
55
Volume:
1997
DOI:
Issue:
149
Series:
Working Paper No. 1997/149
Stock No:
WPIEA1491997
ISBN:
9781451923551
ISSN:
1018-5941
Notes
Also published in Staff Papers, Vol. 45, No. 2, June 1998.
