Does the Balassa-Samuelson Theory Explain the Link Between Relative Population Growth and Purchasing Power Parity?
Relative population growth affects relative prices through the so-called Balassa–Samuelson (BS) mechanism and that in turn impacts PPP. This paper empirically investigates the relationship between the PPP exchange rate and relative population growth in a panel of 80 selected countries. Following the...
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| Format: | Journal Article |
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Economic Society of Singapore
2013
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| Online Access: | http://hdl.handle.net/20.500.11937/7495 |
| _version_ | 1848745385294561280 |
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| author | Hassan, A. Salim, Ruhul |
| author_facet | Hassan, A. Salim, Ruhul |
| author_sort | Hassan, A. |
| building | Curtin Institutional Repository |
| collection | Online Access |
| description | Relative population growth affects relative prices through the so-called Balassa–Samuelson (BS) mechanism and that in turn impacts PPP. This paper empirically investigates the relationship between the PPP exchange rate and relative population growth in a panel of 80 selected countries. Following the BS hypothesis, this paper argues that relative population growth affects nominal wages that impact price levels and thereby impacts PPP. Using panel cointegration and fully modified ordinary least square (FMOLS), the empirical results show that there is a stable relationship between PPP exchange rate and relative population growth in the long run. These empirical findings suggest that population growth have an important role in exchange rate determination through PPP. |
| first_indexed | 2025-11-14T06:16:31Z |
| format | Journal Article |
| id | curtin-20.500.11937-7495 |
| institution | Curtin University Malaysia |
| institution_category | Local University |
| last_indexed | 2025-11-14T06:16:31Z |
| publishDate | 2013 |
| publisher | Economic Society of Singapore |
| recordtype | eprints |
| repository_type | Digital Repository |
| spelling | curtin-20.500.11937-74952019-02-19T04:26:00Z Does the Balassa-Samuelson Theory Explain the Link Between Relative Population Growth and Purchasing Power Parity? Hassan, A. Salim, Ruhul purchasing power parity population growth Balassa–Samuelson hypothesis panel cointegration Relative population growth affects relative prices through the so-called Balassa–Samuelson (BS) mechanism and that in turn impacts PPP. This paper empirically investigates the relationship between the PPP exchange rate and relative population growth in a panel of 80 selected countries. Following the BS hypothesis, this paper argues that relative population growth affects nominal wages that impact price levels and thereby impacts PPP. Using panel cointegration and fully modified ordinary least square (FMOLS), the empirical results show that there is a stable relationship between PPP exchange rate and relative population growth in the long run. These empirical findings suggest that population growth have an important role in exchange rate determination through PPP. 2013 Journal Article http://hdl.handle.net/20.500.11937/7495 10.1142/S0217590813500070 Economic Society of Singapore fulltext |
| spellingShingle | purchasing power parity population growth Balassa–Samuelson hypothesis panel cointegration Hassan, A. Salim, Ruhul Does the Balassa-Samuelson Theory Explain the Link Between Relative Population Growth and Purchasing Power Parity? |
| title | Does the Balassa-Samuelson Theory Explain the Link Between Relative Population Growth and Purchasing Power Parity? |
| title_full | Does the Balassa-Samuelson Theory Explain the Link Between Relative Population Growth and Purchasing Power Parity? |
| title_fullStr | Does the Balassa-Samuelson Theory Explain the Link Between Relative Population Growth and Purchasing Power Parity? |
| title_full_unstemmed | Does the Balassa-Samuelson Theory Explain the Link Between Relative Population Growth and Purchasing Power Parity? |
| title_short | Does the Balassa-Samuelson Theory Explain the Link Between Relative Population Growth and Purchasing Power Parity? |
| title_sort | does the balassa-samuelson theory explain the link between relative population growth and purchasing power parity? |
| topic | purchasing power parity population growth Balassa–Samuelson hypothesis panel cointegration |
| url | http://hdl.handle.net/20.500.11937/7495 |