Efekt Balassy-Samuelsona i mechanizmy jego absorpcji
The Balassa-Samuelson Effect and the Mechanisms of Its Absorption

Summary/Abstract: The Balassa-Samuelson effect and the effectiveness of the potential channels of its absorption require deeper research, especially with regard to the catching-up prospective members of the euro area. The analysis presented in the paper allows to assess the magnitude of inflationary pressure resulting from the real convergence process and, hence, the risk of inadequacy of the common monetary policy with respect to the Polish economy. The results suggest that the systematic inflation differentials can constitute a considerable cost in the case of Poland’s accession to the euro area, since their estimated magnitude is higher than in the case of the peripheral member countries in the first decade of the functioning of the euro area. Moreover, inflationary pressure in Poland resulting from the catching-up process was reinforced in the sample period by the functioning of the domestic labour market. The analysis indicates that ignoring the influence of labour and product markets in the specification of the Balassa-Samuelson model can lead to biased results.

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