countries. The paper begins by surveying earlier estimates of relative productivity and unit labor cost levels and evaluating … productivity translated into dollars at purchasing power parity exchange rates. These estimates are compared with results obtained …

empirically, as global shocks account for roughly fifty percent of the overall variance of productivity. An apparent puzzle …, however, is that the current account seems to respond by much less than investment to country-specific productivity shocks …-specific productivity; in general, the current account response is more sensitive than is the investment response. Our results thus support …