Reconsidering the price-income relationship across countries

Arbeitspapier

This study reconsiders the well-known cross-country positive association between prices and income by focusing on heterogeneity between the inter-developed-country and inter-developing-country relationships. Empirical results reveal not only that developed and developing countries differ in magnitude of the income effect on prices, but also that they exhibit the positive price-income association for different reasons. Specifically, we find only for the inter-developed-country case that the positive price-income association is attributable, at least partly, to the Balassa-Samuelson productivity differential effect. The idiosyncrasy of the inter-developing-country relationship is not dissolved by controlling for the effects of a variety of real and financial variables.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: CESifo Working Paper ; No. 4129

Classification and Topics

• Classification: Wirtschaft ; Open Economy Macroeconomics ; Foreign Exchange ; Measurement and Data on National Income and Product Accounts and Wealth; Environmental Accounts
• Subject: Balassa-Samuelson effect ; non-traded goods ; purchasing power parity ; Penn effect ; price-income relationship ; productivity differential ; real exchange rate

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Fujii, Eiji
• Event: Veröffentlichung
• (who): Center for Economic Studies and ifo Institute (CESifo)
• (where): Munich
• (when): 2013

Further information

• Handle: http://hdl.handle.net/10419/69984
• Last update: 10.03.2025, 11:45 AM CET