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Home bias and purchasing power parity: evidence from the G-7 countries Author info | Abstract | Publisher info | Download info | Related research | Statistics Nikolaos Mylonidis (Department of Economics, University of Ioannina, Greece)
Dimitrios Sideris
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Recent studies in the international economics literature emphasize the role of home bias in explaining a number of empirical puzzles. In the present study, we test for the following hypotheses: (i) that a home bias effect, which is nevertheless falling over time as traded goods markets become more integrated and consumption preferences become more similar across developed countries, influences the relationship among nominal exchange rates, domestic and foreign prices, and (ii) that incorporation of the home bias effect in the empirical specification of PPP enhances the robustness of the theory. We perform a panel data analysis using quarterly observations for the G-7 economies in the post-Bretton Woods era. The results confirm our hypotheses. Copyright © 2007 John Wiley & Sons, Ltd.
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Article provided by John Wiley & Sons, Ltd. in its journal International Journal of Finance & Economics .
Volume (Year): 13 (2008)
Issue (Month): 2 ()
Pages: 199-204
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Handle: RePEc:ijf:ijfiec:v:13:y:2008:i:2:p:199-204Contact details of provider: Web page: http://www.interscience.wiley.com/jpages/1076-9307/
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References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile , click on "citations" and make appropriate adjustments.: Alan M. Taylor & Mark P. Taylor, 2004.
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Other versions: Warnock, Francis E., 2003.
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Journal of International Money and Finance ,
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Brissimis, Sophocles N. & Sideris, Dimitris A. & Voumvaki, Fragiska K., 2005.
"Testing long-run purchasing power parity under exchange rate targeting ,"
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Other versions: Georgopoulos, George J. & Hejazi, Walid, 2005.
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