holds for tradable goods) results in little support of BS hypothesis. Our estimates of the BS term suggest that the Balassa-Samuelson … effect in these 4 CEE countries does not have to be as sizeable as other studies propose. …

According to the Balassa-Samuelson effect, productivity gains in the domestic tradable sector raise the relative price … that the Balassa-Samuelson effect only explains the Penn effect either for a sufficiently high trade elasticity or for a … of domestic non-tradables causing deviations from the purchasing power parity. In the literature, the Balassa-Samuelson …