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The effect of Balassa-Samuelson in South-East Asia


Mohamad, Saadiah and Jusoff, Kamaruzaman and Nair, Mahendhiran and Zaghlol, Azlul Khalilah (2008) The effect of Balassa-Samuelson in South-East Asia. Asian Social Science, 4 (8). pp. 112-116. ISSN 1911-2017; ESSN: 1911-2025

Abstract / Synopsis

High growth in the South-East Asian countries for the past three decades should imply high increases in productivity to reveal the Balassa-Samuelson (BS) effect of high growth accompanied by real exchange rate (RER) appreciation. This paper examines the effects of productivity increases by developing a robust unrestricted error correction model (UECM) of RER based on a class of theories of time-varying equilibrium exchange rates as opposed to the conventional PPP-based theory. An empirical study was carried out on four selected Southeast Asian countries: Indonesia, Malaysia, Singapore, and Thailand. This work suggests that the effects of productivity increases may be more complicated than what the theory suggests and points to the possibility that the Balassa-Samuelson is affected by the stage of economic development rather than mere productivity increases.

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Additional Metadata

Item Type: Article
Divisions: Faculty of Forestry
DOI Number: 10.5539/ass.v4n8p112
Publisher: Canadian Center of Science and Education
Keywords: Balassa-Samuelson; Currency; Equilibrium real exchange rate; Productivity; Unrestricted error correction model
Depositing User: Norhazura Hamzah
Date Deposited: 29 Jul 2010 18:03
Last Modified: 23 Oct 2017 13:07
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