Series: Working Papers. 0205.
Author: Ángel Estrada y J. David López-Salido.
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Abstract
We explore the implications of the differential behavior of total factor productivity across sectors to understand the dynamics of the relative prices of services to manufacturing sectors. We find that contrary to the redictions of the Balassa-Samuelson hypothesis, the evolution of relative markups between services and manufacturing sectors has been a key determinant of recent Spanish dual inflation.