The Balassa–Samuelson Hypothesis in the Asia‐Pacific Region Revisited*

In a study of nine Asia‐Pacific countries' real exchange rates, Chinn (2000) finds some evidence in support of the Balassa (1964) and Samuelson (1964) 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.