Abstract

The choice of this topic is motivated by the observation that the so-called Balassa Samuelson effect is the most prominent explanation for structural inflation differentials and at the same time not without controversy. The aim of the project is not to conduct a “traditional” analysis of the Balassa Samuelson effect's role. Instead it focuses on underlying mechanisms on goods and labour markets. A further aim is to understand by how much the precise setup of an empirical analysis influences the results.