NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

The Assessment of National Price Levels

Irving B. Kravis, Robert E. Lipsey

NBER Working Paper No. 1912 (Also Reprint No. r1043)
Issued in May 1986
NBER Program(s):   ITI   IFM

This paper attempts to find norms for long-run national price levels,and therefore, by implication, for exchange rates, that are superior to those implied by the absolute or relative versions of purchasing power parity theory. The structural variables we have found to determine these price levels, real income per capita, the openness of the economy, and the share of tradables in total output, are used to explain price levels in periods since 1960 and to some extent since 1950.The results suggest that there was a movement toward a more "orderly" alignment of price levels, especially in the period before the 1970's. That is,national price levels came to be explained to an increasing degree by our structural variables. The price levels implied by the structural equations appear to come closer to representing long-run equilibrium levels than do those implied by purchasing power parity. The deviations from the structural equations seem to have value inpredicting future changes in price levels or real exchange rates,in conbination with changes in the structural variables. And they also contribute to predicting changes in the balance of trade.

download in pdf format
   (715 K)

download in djvu format
   (476 K)

email paper

This paper is available as PDF (715 K) or DjVu (476 K) (Download viewer) or via email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w1912

Published:

  • Kravis, Irving B. and Robert E. Lipsey."The Assessment of National Price Levels," Real-Financial Linkages among Open Economies, eds. Sven W. Arndt & J . David Richardson, Cambridge, MA: MIT Press, Fall 1987.
  • Kravis, Irving B. and Robert E. Lipsey. "National Price Levels And The Prices Of Tradables And Nontradables," American Economic Review, 1988, v78(2), 474-478.

Users who downloaded this paper also downloaded these:
Kravis and Lipsey w2536 National Price Levels and the Prices of Tradables and Nontradables
Kravis and Lipsey w1034 Towards an Explanation of National Price Levels
Mincer w1907 Wage Changes in Job Changes
Marston w1922 Real Exchange Rates and Productivity Growth in the United States and Japan
 
Publications
Activities
Meetings
NBER Videos
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us