The Balassa-Samuelson Hypothesis in the Asia-Pacific Region Revisited

In a study of nine Asia-Pacific countries' real exchange rates, <link rid="b6">Chinn (2000)</link> finds some evidence in support of the <link rid="b1">Balassa (1964)</link> and <link rid="b20">Samuelson (1964)</link> hypothesis. His findings, however, are based on the application of a model containing several potentially restrictive simplifying assumptions to a dataset of limited span. Consequently, we look to assess the effect on Chinn's findings of considerably increasing the sample size and relaxing these assumptions. We find a comparable level of evidence for the Balassa-Samuelson hypothesis when applying Chinn's model to the larger sample, but obtain significantly greater support when a less restrictive approach is adopted. Copyright © 2008 The Authors; Journal compilation © 2008 Blackwell Publishing Ltd.