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Validity of Purchasing Power Parity (PPP) Hypothesis in the Ecowas (1980–2017)

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  • Oladunjoye Opeyemi Nathaniel

Abstract

This study investigates the validity of a purchasing power parity (PPP) hypothesis in the ECOWAS. Secondary data on real exchange rates, domestic inflation rates, and foreign inflation rates were sourced from the World Development Indicators of the World Bank (2018). Unit root tests, Panel unit root tests, and panel cointegration tests were used to investigate the validity of the PPP hypothesis in the ECOWAS. The study found that the PPP hypothesis is valid individually in all the ECOWAS member countries. The results from the panel unit root tests also confirm the validity of the PPP hypothesis in the ECOWAS. Specifically, the LLC with individual intercept ( t = −5.97117, p

Suggested Citation

  • Oladunjoye Opeyemi Nathaniel, 2019. "Validity of Purchasing Power Parity (PPP) Hypothesis in the Ecowas (1980–2017)," Emerging Economy Studies, International Management Institute, vol. 5(2), pages 141-156, November.
    • Handle: RePEc:sae:emecst:v:5:y:2019:i:2:p:141-156
    DOI: 10.1177/2394901519870886
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