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Real Exchange Rates in Growing Economies: How Strong Is the Role of the Nontradables Sector?
Author:
Mr. Ken Miyajima
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Series:
IMF Working Papers
Volume/Issue:
Volume 2005: Issue 233
Language:
English
Publication Date:
01 Dec 2005
DOI:
https://doi.org/10.5089/9781451862522.001
ISBN:
9781451862522
ISSN:
1018-5941
Pages:
35
Keywords:
WP
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IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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This paper emphasizes the importance of total factor productivity (TFP) developments in the nontradables sector to quantitatively demonstrate that the time-honored Balassa-Samuelson hypothesis does not generally apply to episodes of economic growth. Though the Balassa- Samuelson hypothesis postulates that strong economic growth should, in general, be accompanied by a real appreciation in exchange rates, this paper does not find such systematic links. This is because some growth spurts are marked by equal TFP gains in both the tradables and nontradables sectors, and others by larger TFP gains in the nontradables sector.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund