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Purchasing Power Parity and the Chinese Yuan

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  • Richard Paul Gregory

    ()
    (East Tennessee State University)

  • Gary Shelley

    ()
    (East Tennessee State University)

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    Abstract

    Results from unit root tests applied to the bilateral China - US real exchange rate do not support purchasing power parity between the two countries. However, tests of the real equivalent exchange rate for the Chinese yuan versus a traded-weighted basket of currencies support purchasing power parity. Due to severe non-normality, critical values for tests of the real equivalent exchange rate are obtained from the wild bootstrap.

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    File URL: http://www.accessecon.com/Pubs/EB/2011/Volume31/EB-11-V31-I2-P117.pdf
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    Bibliographic Info

    Article provided by AccessEcon in its journal Economics Bulletin.

    Volume (Year): 31 (2011)
    Issue (Month): 2 ()
    Pages: 1247-1255

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    Handle: RePEc:ebl:ecbull:eb-11-00048

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    Related research

    Keywords: China; purchasing power parity; unit root test; wild bootstrap;

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    1. International Monetary Fund, 2005. "New Rates From New Weights," IMF Working Papers 05/99, International Monetary Fund.
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    Cited by:
    1. Chan, Tze-Haw & Baharumshah, Ahmad Zubaidi, 2012. "Financial Integration between China and Asia Pacific Trading Partners: Parities Evidence from the First- and Second-generation Panel Tests," MPRA Paper 37801, University Library of Munich, Germany.
    2. Chan, Tze-Haw, 2011. "A structural modeling of exchange rate, prices and interest rates between Malaysia-China in the liberalization era," MPRA Paper 32955, University Library of Munich, Germany.

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