The paper provides an explanation for the secular increase in the price of services relative to that of manufactured goods that relies on capital accumulation rather than on an exogenous total factor productivity growth differential. The key assumptions of the two-sector, intertemporal...

The Maastricht criteria for accession to the euro area can be difficult for any economy to achieve, not least because of the challenges posed by the “impossible trinity”, which suggests that it is not possible to target both a stable exchange rate and stable inflation at the same time as...

Differences in growth, productivity and inflation levels are going to be a prominent feature of the future of EMU, as the convergence process is still ongoing in the new Member States. This convergence process can be described by the Balassa-Samuelson proposition, which states that faster growth...