Is The Real Effective Exchange Rate Biased Against the PPP Hypothesis?
AbstractWe show that the use of the real effective exchange rate to test for purchasing power parity, as in Astorga (2012) and other studies, is subject to a problem that biases tests against finding evidence of PPP. The problem is illustrated using Astorga´s data on six Latin American countries.
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Bibliographic InfoArticle provided by AccessEcon in its journal Economics Bulletin.
Volume (Year): 34 (2014)
Issue (Month): 1 ()
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PPP; Real Effective Exchange Rates; Real Exchange Rates; Stationarity; Unit Root; Cointegration;
Other versions of this item:
- Ventosa-Santaulària, Daniel & Wallace, Frederick & Gómez-Zaldívar, Manuel, 2012. "Is the real effective exchange rate biased against the PPP hypothesis?," MPRA Paper 42488, University Library of Munich, Germany.
- F3 - International Economics - - International Finance
- C2 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables
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