Competitiveness in Transition Economies: What Scope for Real Appreciation?

Kornelia Krajnyak and Jeromin Zettelmeyer

No 1997/149, IMF Working Papers from International Monetary Fund

Abstract: 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.

Keywords: WP; dollar wage; exchange rate; transition economy; current account; equilibrium wage; price level; Wages; Real exchange rates; Productivity; Human capital; Competition; Eastern Europe; Baltics; Central and Eastern Europe (search for similar items in EconPapers)
Pages: 55
Date: 1997-11-01
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Citations: View citations in EconPapers (19)

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Persistent link: https://EconPapers.repec.org/RePEc:imf:imfwpa:1997/149

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