The Balassa-Samuelson Effect in the Bulgarian Economy

This research studies the influence of the Balassa-Samuelson effect on Bulgarian inflation and the real appreciation of BGN in relation to main trade partners currencies. According to the results obtained, the Balassa-Samuelson hypothesis stands for the Bulgarian economy. The higher rate of tradable sector productivity in Bulgaria brings about adjustment of wages and prices to EU countries levels. Thus the assumed sustainable GDP growth would still evoke higher inflation rates in Bulgaria compared to EU. Additional effects on Bulgarian inflation rates would have the conclusion of price liberalization and excises harmonization.