This paper analyses the Balassa and Samuelson hypothesis in two groups of European countries: six New Member States (NMS) and six advanced EU-15 economies. It is found that the second stage of the hypothesis, which relates relative sector prices with the real exchange rate, does not hold...

This paper analyses the Balassa and Samuelson hypothesis in two groups of countries: six New Member States (NMSs) of the EU and six old member states (OMSs) not affected by the transition problems. We find that in the NMS group, the model may be successfully enlarged with variables that account...

A pervasive concern with the use of subjective data in choice models is that the data are biased and endogenous. This paper examines the extent to which cognitive biases plague subjective data, specifically addressing 1) whether cognitive dissonance affects the reporting of beliefs, and 2)...