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E-book
Author Asea, Patrick K

Title Do Long-Run Productivity Differentials Explain Long-Run Real Exchange Rates? / Patrick K Asea
Published Washington, D.C. : International Monetary Fund, 1994

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Description 1 online resource (46 pages)
Series IMF Working Papers; Working Paper, 1018-5941 ; No. 94/60
IMF Working Papers; Working Paper ; no. 94/60
Summary We develop a two-country, balanced-growth intertemporal general equilibrium model to examine two predictions of the Balassa-Samuelson model, namely that (i) productivity differentials determine the domestic relative price of nontradables and (ii) deviations from purchasing power parity reflect differences in the relative price of nontradables. In our model, the equilibrium relative price of nontradables along the long-run balanced-growth path is determined by the ratio of the marginal products of labor in the tradable and nontradable sectors. The empirical relevance of the Balassa-Samuelson predictions is examined using the Hodrick-Prescott filter to extract long-run components from a panel database for fourteen OECD countries. The evidence indicates that labor productivity differentials do explain long-run, cross-country differences in relative prices. The predicted relative prices, however, are of little help in explaining long-run deviations from purchasing power parity
Notes English
Print version record
Subject Exchange Rates.
Real Exchange Rate.
Real Exchange Rates.
Relative Price.
Relative Prices.
Belgium.
Germany.
Japan.
Netherlands.
United States.
Form Electronic book
Author Asea, Patrick K
Mendoza, Enrique G
ISBN 145184798X
9781451847987
1462343953
9781462343959
145525049X
9781455250493
1281600725
9781281600721
1455204978
9781455204977
9786613781413
661378141X