Productivity, tradability, and the long-run price puzzle

Paul Bergin, Reuven Glick () and Alan M. Taylor ()

No 2004-08, Working Papers in Applied Economic Theory from Federal Reserve Bank of San Francisco

Abstract: Long-run cross-country price data exhibit a puzzle. Today, richer countries exhibit higher price levels than poorer countries, a stylized fact usually attributed to the “Balassa-Samuelson” effect. But looking back fifty years, or more, this effect virtually disappears from the data. What is often assumed to be a universal property is actually quite specific to recent times. What might explain this historical pattern? We adopt a framework where goods are differentiated by tradability and productivity. A model with monopolistic competition, a continuum-of-goods, and endogenous tradability allows for theory and history to be consistent for a wide range of underlying productivity shocks.

Keywords: Prices; Productivity; Econometric models (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dev
Date: 2004
View list of references View citations in EconPapers

Downloads: (external link)
http://www.frbsf.org/publications/economics/papers/2004/wp04-08bk.pdf (application/pdf)

Related works:
Working Paper: Productivity, Tradability, and the Long-Run Price Puzzle (2004)
Working Paper: Productivity, Tradability and the Long-Run Price Puzzle (2004)
Working Paper: Productivity, Tradability, and the Long-Run Price Puzzle (2005)
Journal Article: Productivity, tradability, and the long-run price puzzle (2006)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:fip:fedfap:2004-08

Ordering information: This working paper can be ordered from
http://www.frbsf.org/popups/fiporder.html

Access Statistics for this paper

More papers in Working Papers in Applied Economic Theory from Federal Reserve Bank of San Francisco
Contact information at EDIRC.
Series data maintained by Diane Rosenberger ().