@techreport{NBERw10569,
 title = "Productivity, Tradability, and the Long-Run Price Puzzle",
 author = "Paul Bergin and Reuven Glick and Alan M. Taylor",
 institution = "National Bureau of Economic Research",
 type = "Working Paper",
 series = "Working Paper Series",
 number = "10569",
 year = "2004",
 month = "June",
 URL = "http://www.nber.org/papers/w10569",
 abstract = {Long-run cross-country price data exhibit a puzzle. Today, richer countries exhibit higher price levels than poorer countries, a stylized fact usually attributed to the  Balassa- Samuelson' effect. But looking back fifty years, or more, this effect virtually disappears from the data. What is often assumed to be a universal property is actually quite specific to recent times. What might explain this historical pattern? We adopt a framework where goods are differentiated by tradability and productivity. A model with monopolistic competition, a continuum-of-goods, and endogenous tradability allows for theory and history to be consistent for a wide range of underlying productivity shocks.},
}