Estimating the Baumol-Bowen and Balassa-Samuelson effects in the Polish economy - a disaggregated approach

Karolina Konopczak () and Andrzej Torój
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Karolina Konopczak: Ministry of Finance in Poland, Postal: Warszawa, Poland

No 7, MF Working Papers from Ministry of Finance in Poland

Abstract: This paper estimates the magnitude of the Baumol-Bowen and Balassa-Samuleson effects in the Polish economy. The purpose of the analysis is to establish to what extent the differential price dynamics in Poland and in the euro area and the real appreciation of PLN against EUR are explained by the differential in respective productivity dynamics. The historical contribution of the Baumol-Bowen effect to Polish inflation rate is estimated at 0.7-1.0 percentage points in the short run. According to estimation results, the Balassa-Samuelson effect contributed around 0.9 to 1.3 percentage point per annum to the rate of relative price growth between Poland and the euro area and 0.9 to 1.6 p.p. to real exchange rate appreciation. Sub-sample calculations and productivity trends over the last decade suggest that this impact should be declining. However, its size is still non-negligible for policymakers in the context of euro adoption in Poland.

Keywords: Balassa-Samuelson hyp othesis; monetary integration; real appreciation; panel cointegration (search for similar items in EconPapers)
JEL-codes: C33 E31 F31 F41 (search for similar items in EconPapers)
Pages: 42 pages
Date: 2010-09-27, Revised 2010-09-27
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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https://www.gov.pl/documents/1079560/1080340/MF_WP ... 69-5eb0-f61645c878d1 Full text (application/pdf)

Related works:
Journal Article: Estimating the Baumol-Bowen and Balassa-Samuelson Effects in the Polish Economy - a Disaggregated Approach (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:ris:mfplwp:0007

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