Price Convergence: What Can the Balassa-Samuelson Model Tell Us? (in English)

Martin Èihák and Tomas Holub
Authors registered in the RePEc Author Service: Martin Cihak ()

Czech Journal of Economics and Finance (Finance a uver), 2003, vol. 53, issue 7-8, 334-355

Abstract: The article contributes to the theory of convergence in the price level and relative prices. The authors present a model integrating the Balassa-Samuelson model of real equilibrium exchange rate with a model of capital accumulation and with the demand side of the economy. They also show how the Balassa-Samuelson model can be extended to the case of more than two goods. The predictions of the Balassa-Samuelson model are generally consistent with empirical findings in Central and Eastern European countries. The authors show how the model can be used toward projecting price convergence in a transition economy.

Keywords: inflation; relative prices; Balassa-Samuelson model (search for similar items in EconPapers)
JEL-codes: E31 E52 E58 F15 P22 (search for similar items in EconPapers)
Date: 2003
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:fau:fauart:v:53:y:2003:i:7-8:p:334-355

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