The Behavior of Nontradable Goods Prices in Europe: Evidence and Interpretation
May 1, 1993
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Summary
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.
Subject: Foreign exchange, Labor, Labor demand, Labor productivity, Production, Real exchange rates, Real wages, Total factor productivity
Keywords: Europe, exchange rate, goods market imperfection, goods sector, Labor demand, Labor productivity, nontradable goods, present discounted value, price level, Real exchange rates, real wage, Real wages, Total factor productivity, WP
Pages:
62
Volume:
1993
DOI:
Issue:
045
Series:
Working Paper No. 1993/045
Stock No:
WPIEA0451993
ISBN:
9781451974263
ISSN:
1018-5941
