Harrod, Balassa and Samuelson (Re)Visit Eastern Europe

Robert Sonora and Josip Tica

No 907, EFZG Working Papers Series from Faculty of Economics and Business, University of Zagreb

Abstract: In this paper we investigate Harrod Balassa Samuelson (HBS) effect in 11 transition countries. A large number of empirical papers based on quite limited datasets has already been published on HBS in Eastern Europe. The major contribution of this paper is the fact that we estimate HBS with NACE6 quarterly national account data which enables us to divide data into tradable and nontradable sector as suggested by De Gregorio, Giovannini and Wolf (1994) without any unrealistic assumptions. Following Bergstrand (1991) together with relative productivity we also employ share of government consumption in GDP as an explanatory variable. Unlike in previous studies, results have indicated that it is possible to find univariate cointegrating vectors only in Bulgaria, Croatia and Lithuania, and panel cointegration test has indicated that it is possible to find strong evidence of cointegration in post 2000 sample. For the post 1995 period, rejection of the null hypothesis is dependent on the inclusion of government consumption as independent variable and methodology used (DOLS vs. OLS cointegration test).

Keywords: Harrod Balassa Samuelson effect; Price convergence; Transition countries; panel cointegration tests (search for similar items in EconPapers)
JEL-codes: F15 F21 F43 (search for similar items in EconPapers)
Pages: 20
Date: 2009-06-24
New Economics Papers: this item is included in nep-eec, nep-opm and nep-tra
References: Add references at CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
http://web.efzg.hr/repec/pdf/Clanak%2009-07.pdf First version, 2009 (application/pdf)

Related works:
Journal Article: Harrod, Balassa, and Samuelson (re)visit Eastern Europe (2014)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:zag:wpaper:0907

Access Statistics for this paper

More papers in EFZG Working Papers Series from Faculty of Economics and Business, University of Zagreb Contact information at EDIRC.
Bibliographic data for series maintained by WPS ( this e-mail address is bad, please contact ).