Competitiveness in Transition Economies: What Scope for Real Appreciation?

By Kornelia Krajnyak, Jeromin Zettelmeyer

November 1, 1997

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Kornelia Krajnyak, and Jeromin Zettelmeyer. Competitiveness in Transition Economies: What Scope for Real Appreciation?, (USA: International Monetary Fund, 1997) accessed November 23, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper estimates equilibrium dollar wages for 15 transition economies. Equilibrium dollar wages are interpreted as full employment wages consistent with a country’s physical and human capital endowment, and estimated by regressing actual dollar wages on productivity and human capital proxies in a short (1990-95) panel of 85 countries. The main results are: (i) equilibrium dollar wages have appreciated steadily in the Baltic countries and fast-reforming Central and Eastern European (CEE) transition economies, but have been flat in most CIS countries; and (ii) 1996 actual dollar wages remain below estimated equilibrium dollar wages for most but not all transition countries covered.

Subject: Competition, Financial markets, Foreign exchange, Human capital, Labor, Production, Productivity, Real exchange rates, Wages

Keywords: Baltics, Central and Eastern Europe, Competition, Current account, Dollar wage, Eastern Europe, Equilibrium wage, Exchange rate, Human capital, Price level, Productivity, Real exchange rates, Transition economy, Wages, WP

Publication Details

Pages:

55
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 1997/149
Stock No:

WPIEA1491997
ISBN:

9781451923551
ISSN:

1018-5941

Notes

Also published in Staff Papers, Vol. 45, No. 2, June 1998.

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