The Real Exchange Rate and the Balassa-Samuelson Effect: The Role of the Distribution Sector

20 Pages Posted: 14 Mar 2005

See all articles by Ronald MacDonald

Ronald MacDonald

University of Strathclyde in Glasgow - Department of Economics; Government of New Zealand - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute)

Luca A. Ricci

International Monetary Fund (IMF) - Research Department

Abstract

This paper investigates the long-run impact of the distribution sector on the real exchange rate. The main result is that an increase in the productivity and product market competition of the distribution sector with respect to foreign countries leads to an appreciation of the real exchange rate, similar to what a relative increase in the domestic productivity of tradables does. This contrasts with the result that one would expect by considering the distribution sector as belonging to the non-tradable sector. One explanation may lie in the use of the services from the distribution sector in the tradable sector.

Suggested Citation

MacDonald, Ronald R. and Ricci, Luca Antonio, The Real Exchange Rate and the Balassa-Samuelson Effect: The Role of the Distribution Sector. Available at SSRN: https://ssrn.com/abstract=681710

Ronald R. MacDonald (Contact Author)

University of Strathclyde in Glasgow - Department of Economics ( email )

100 Cathedral Street
Glasgow G4 0LN
United Kingdom
+44 141 548 3861 (Phone)

Government of New Zealand - Department of Economics

2 The Terrace
P.O. Box 2498
Wellington
New Zealand

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

HOME PAGE: http://www.CESifo.de

Luca Antonio Ricci

International Monetary Fund (IMF) - Research Department ( email )

700 19th Street NW
Washington, DC 20431
United States
202-623-6007 (Phone)
202-623-4072 (Fax)

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
22
Abstract Views
1,145
PlumX Metrics