Title: Productivity, tradability, and the long-run price puzzle
Description: "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"--National Bureau of Economic Research web site.
Subjects: Case studies, Econometric models, Industrial productivity, Prices