The Behavior of Nontradable Goods Prices in Europe: Evidence and Interpretation
62 Pages Posted: 15 Feb 2006
Date Written: May 1993
Abstract
This paper examines the evolution of the relative price between tradable and nontradable goods in a group of European countries. A model of an open economy is used to analyze different factors that can account for an increase in the relative price of nontradable goods. These factors are: (a) faster technological progress in the tradable goods sector; (b) demand shifts toward nontradable goods; and (c) real wage pressures. The relevance of these factors is analyzed empirically for France, Germany, Italy, Spain and the United Kingdom.
JEL Classification: F3, F4
Suggested Citation: Suggested Citation
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