The real exchange rate and the Balassa-Samuelson effect: the role of the distribution sector

Macdonald, R. and Ricci, L.A. (2005) The real exchange rate and the Balassa-Samuelson effect: the role of the distribution sector. Pacific Economic Review, 10(1), pp. 29-48. (doi:10.1111/j.1468-0106.2005.00259.x)

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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.

Item Type:Articles
Status:Published
Refereed:Yes
Glasgow Author(s) Enlighten ID:MacDonald, Professor Ronald
Authors: Macdonald, R., and Ricci, L.A.
College/School:College of Social Sciences > Adam Smith Business School > Economics
Journal Name:Pacific Economic Review
ISSN:1361-374X
ISSN (Online):1468-0106
Published Online:08 March 2005

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