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Is absolute purchasing power parity special for Spain?

Author

Listed:
  • Zhibai Zhang

    (Nanjing University of Finance and Economics)

  • Zhicun Bian

    (Nanjing University of Finance and Economics)

  • Minghua Zhan

    (Guangdong University of Foreign Studies)

Abstract

Previous researches reveal that the validity of absolute purchasing power parity (APPP) may be weak or special for Spain. Thus, we explore the failure or the special character of APPP by examining 18 bilateral real exchange rates (RERs) between Spain and its main trade partners. Previous testing methods in this use are reduced and improved. The validity of APPP for these RERs is found to be very weak in general. Though the Penn effect is found to fail in some cases, it still plays a dominant role in general, whether examined from the rule of thumb or from the econometric analysis.

Suggested Citation

  • Zhibai Zhang & Zhicun Bian & Minghua Zhan, 2022. "Is absolute purchasing power parity special for Spain?," Empirical Economics, Springer, vol. 62(2), pages 513-531, February.
    • Handle: RePEc:spr:empeco:v:62:y:2022:i:2:d:10.1007_s00181-021-02038-y
    DOI: 10.1007/s00181-021-02038-y
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    More about this item

    Keywords

    Absolute purchasing power parity; Real exchange rate; Spain;
    All these keywords.

    JEL classification:

    • F - International Economics
    • F - International Economics

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