A method for analyzing productivity convergence based on frontier production functions is proposed. It is examined whether departures from the frontier - country-level inefficiencies - exhibit long-run relationships and convergence. The method is applied to 1-digit industries of 14 OECD...

Within the Balassa-Samuelson framework, productivity growth can lead to time trends in real exchange rates. The relative price of tradables and nontradables can undergo a significant change for countries experiencing dramatic productivity growth. This suggests that real exchange rates of...