This paper is an exercise in applied macroeconomic forecasting. We examine the forecasting power of a vector error-correction model (VECM) that is anchored by a long-run equilibrium relationship between Greek national income and productive public expenditure as suggested by the economic theory....

This paper investigates empirically the long-run linkages between sectoral relative prices and labor productivities implied by the Balassa (1964) and Samuelson (1964) framework. The role of wage non-homogeneity across sectors is explored by incorporating sectoral wages into the analysis. The...