The Baumol-Balassa-Samuelson Effect Over One Century In Six Eu Countries And The United States
The aim of this paper is to test the Baumol-Balassa-Samuelson effect in seven countries over one century. The test accounts for an endogenous structural break in data and shows that the relative price of non-tradable goods shares a common stochastic trend with differences in productivity growth between the tradable and non-tradable sectors in six countries. The estimates of this paper suggest that differences in productivity growth between countries are an important determinant of the behaviour of real exchange rates.
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Volume (Year): 8 (2008)
Issue (Month): 1 ()
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