The Penn-Belassa-Samuelson effect in developing countries: price and income revisited

Hassan, Fadi (2011) The Penn-Belassa-Samuelson effect in developing countries: price and income revisited. CEP Discussion Papers (CEPDP1056). London School of Economics and Political Science. Centre for Economic Performance, London, UK.

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Abstract

It is conventional wisdom that richer countries have a higher price level than poorer countries. This paper provides evidence that the price-income relationship is non-linear and that it turns negative, or at best flat, in low income countries. The result is robust along both cross-section and time-series dimensions. Additional robustness checks show that biases in PPP estimation and measurement error in low-income countries do not drive the result.

Item Type:	Monograph (Discussion Paper)
Official URL:	https://cep.lse.ac.uk/_new/publications/discussion...
Additional Information:	© 2011 The Author(s)
Divisions:	LSE
Subjects:	H Social Sciences > HC Economic History and Conditions H Social Sciences > HG Finance
JEL classification:	E - Macroeconomics and Monetary Economics > E3 - Prices, Business Fluctuations, and Cycles > E31 - Price Level; Inflation; Deflation F - International Economics > F4 - Macroeconomic Aspects of International Trade and Finance O - Economic Development, Technological Change, and Growth > O1 - Economic Development
Date Deposited:	21 Feb 2024 13:39
Last Modified:	11 Sep 2025 05:16
URI:	http://eprints.lse.ac.uk/id/eprint/121930

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