EU accession of Macedonia – Assessment of Balassa-Samuelson Effect
EU accession of Macedonia – Assessment of Balassa-Samuelson Effect

Author(s): Tijana Angjelkovska
Subject(s): National Economy, EU-Approach / EU-Accession / EU-Development
Published by: AMO – Asociace pro mezinárodní otázky
Keywords: Balassa-Samuelson effect; price convergence; productivity differentials; Macedonia; Euro zone; Maastricht criteria; real exchange rate; tradable sector; non-tradable sector; inflation;
Summary/Abstract: The purpose of our research is to investigate the presence of Balassa-Samuelson effect and its influence in the process of the fulfillment of the Maastricht criteria and price convergence in Macedonia compared to Euro zone. We investigate the domestic and international Balassa-Samuelson effect: for the domestic effect we test if the changes in the productivity differentials between tradable and non tradable sectors cause changes in price levels differentials between the two sectors; whereas, the investigation of the international effect is conducted by applying two models: first one tests the changes in the real exchange rate as a result of the changes in the productivity differentials between Macedonia and Euro zone; the second tests the changes in the price levels differentials between Macedonia and Euro zone, as a result of the changes in the productivity differentials between Euro zone and Macedonia and the changes in the nominal exchange rate.

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