Analytical notes on the Balassa-Samuelson effect
AbstractThe oft invoked Balassa-Samuelson effect, whereby the movements of prices for non-tradable goods relative to those for tradable goods reflect the movements of relative labour productivities, is customarily derived from a standard neo-classical model with highly restrictive features. Minor modifications to the assumptions underlying the model negate the effect. In general, the effect does not necessarily obtain if technical change alters the elasticity parameters of the production functions. Moreover, theeffect does not generally obtain (or cannot even be derived uniquely) in more general models that allow for non-constant returns to scale or intermediate inputs.
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Bibliographic InfoArticle provided by Banca Nazionale del Lavoro in its journal Banca Nazionale del Lavoro Quarterly Review.
Volume (Year): 56 (2003)
Issue (Month): 226 ()
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Other versions of this item:
- F11 - International Economics - - Trade - - - Neoclassical Models of Trade
- F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
- J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
- O33 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
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