The Role of Productivity in the Czech Republic: Does Balassa-Samuelson Effect Still Exist?

Kód výsledku v IS VaVaI

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Výsledek na webu

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DOI - Digital Object Identifier

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Jazyk výsledku

angličtina

Název v původním jazyce

The Role of Productivity in the Czech Republic: Does Balassa-Samuelson Effect Still Exist?

Popis výsledku v původním jazyce

The Purchasing Power Parity (PPP) theory claims that price level (or its changes in the case of relative version of PPP) is the only determinant of the development of exchange rate. Nevertheless, it does not provide good empirical results, especially in the case of transitive economies. One of possible explanation is the existence of Balassa-Samuelson (BS) effect. It is one of the theoretical approaches which try to explain the development of exchange rate and price level. It proposes that faster growth of productivity leads to appreciation of domestic currency and/or to growth of domestic price level. The aim of this paper is to assess the role of BS effect in the Czech Republic. Nevertheless, this approach includes some strong assumptions such as validity of PPP theory for tradeable goods or, in the case of the "domestic" BS effect, the assumption that wages tend to be equalized across tradable and non-tradable sectors. In this paper, the significance of BS effect is tested even if some of these conditions are not valid. We use quarterly data (2000 - 2015) in regression analysis. The Ordinary Least Squares (OLS) method is used to assess the influence of productivity on inflation rate.

Název v anglickém jazyce

The Role of Productivity in the Czech Republic: Does Balassa-Samuelson Effect Still Exist?

Popis výsledku anglicky

The Purchasing Power Parity (PPP) theory claims that price level (or its changes in the case of relative version of PPP) is the only determinant of the development of exchange rate. Nevertheless, it does not provide good empirical results, especially in the case of transitive economies. One of possible explanation is the existence of Balassa-Samuelson (BS) effect. It is one of the theoretical approaches which try to explain the development of exchange rate and price level. It proposes that faster growth of productivity leads to appreciation of domestic currency and/or to growth of domestic price level. The aim of this paper is to assess the role of BS effect in the Czech Republic. Nevertheless, this approach includes some strong assumptions such as validity of PPP theory for tradeable goods or, in the case of the "domestic" BS effect, the assumption that wages tend to be equalized across tradable and non-tradable sectors. In this paper, the significance of BS effect is tested even if some of these conditions are not valid. We use quarterly data (2000 - 2015) in regression analysis. The Ordinary Least Squares (OLS) method is used to assess the influence of productivity on inflation rate.

Druh

D - Stať ve sborníku

CEP obor

AH - Ekonomie

OECD FORD obor

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Projekt

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Návaznosti

S - Specificky vyzkum na vysokych skolach

Rok uplatnění

2016

Kód důvěrnosti údajů

S - Úplné a pravdivé údaje o projektu nepodléhají ochraně podle zvláštních právních předpisů

Název statě ve sborníku

34th International Conference Mathematical Methods in Economics (MME) : proceedings papers

ISBN

978-80-7494-296-9

ISSN

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e-ISSN

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Počet stran výsledku

6

Strana od-do

1-6

Název nakladatele

Technická univerzita Liberec

Místo vydání

Liberec

Místo konání akce

Liberec

Datum konání akce

6. 9. 2016

Typ akce podle státní příslušnosti

EUR - Evropská akce

Kód UT WoS článku

000385239500001