Tests of the uncovered interest rate parity (UIP) are subject to various data problems when long-term interest rates are applied: Due to the long investment period, time intervals for measuring exchange rate movements are usually overlapping and therefore not independent. This shortfall can be...

This paper explores the robustness of the Balassa-Samuelson (BS) hypothesis.We analyze a panel of OECD countries from 1970 to 2008 and compare three different datasets on sectoral productivity, including a newly constructed database on total factor productivity. Overall, our DOLS estimation...

This article challenges the view that a lack of competition and a high level of regulations are the main causes of Switzerland's high prices. First, we point out a number of stylized facts which are inconsistent with this popular view. Second, we econometrically asses the "competition-regulation...

We sketch a model that shows how skill-biased technological changemay reverse the classic Balassa-Samuelson effect, leading to a negativerelationship between the productivity in the tradable sector andthe real exchange rate. In a small open economy, export goods areproduced with capital,...

We sketch a model that shows how skill-biased technological change may reverse the classic Balassa-Samuelson effect, leading to a negative relationship between productivity in the tradable sector and the real exchange rate. In a small open economy, export goods are produced with high-skilled...