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The Baumol-Balassa-Samuelson Effect Over One Century In Six Eu Countries And The United States

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  • RAZGALLAH, B.

Abstract

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.

Suggested Citation

  • Razgallah, B., 2008. "The Baumol-Balassa-Samuelson Effect Over One Century In Six Eu Countries And The United States," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 8(1), pages 41-52.
    • Handle: RePEc:eaa:aeinde:v:8:y:2008:i:1_3
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    References listed on IDEAS

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    More about this item

    Keywords

    productivity bias; real exchange rate; structural break;
    All these keywords.

    JEL classification:

    • F31 - International Economics - - International Finance - - - Foreign Exchange

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