Beyond Balassa - Samuelson: Real Appreciation in Tradables in Transition Countries

Martin Cincibuch () and Jiri Podpiera

Working Papers from Czech National Bank, Research and Statistics Department

Abstract: Using the simple arbitrage model, we decompose real appreciation in tradables in three Central European countries between the pricing-to-market component (disparity) and the local relative price component (substitution ratio). Appreciation is only partially explained by local relative prices. The rest is absorbed by disparity, depending on the size of the no-arbitrage band. The observed disparity fluctuates in a wider band for differentiated products than for a commodity like goods.

Keywords: Purchasing power parity; pricing-to-market; transition; real appreciation; exchange rates (search for similar items in EconPapers)
JEL-codes: F12 F15 (search for similar items in EconPapers)
Date: 2004-12
New Economics Papers: this item is included in nep-ifn and nep-tra
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (22)

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