Balassa-Samuelson effect is observation that price levels in wealthier countries are systematically higher than in poorer ones. This is caused by a deviance in the standard of living between any two countries. What may be regarded as middle class in the United States could very well be regarded as upper class by a citizen of a third world country.

External links

• The Balassa–Samuelson Effect in greater detail (http://www.wiwiss.fu-berlin.de/w3/w3collie/B&W3/Mirror/Webbox0703.htm)