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Revisiting purchasing power parity for 16 Latin American countries: panel SURADF tests

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  • Yang-Cheng Ralph Lu
  • Tsangyao Chang
  • Chi-Chen Chiu
  • Han-Wen Tzeng

Abstract

In this study, we apply the panel Seemingly Unrelated Regressions Augmented Dickey-Fuller (SURADF) tests developed by Breuer et al. (2001) to revisit the validity of Purchasing Power Parity (PPP) for 16 Latin American countries. The empirical results from several panel-based unit root tests indicate that PPP does not hold for these 16 countries under study. However, panel SURADF tests indicate that PPP is valid for 3 of these 16 countries. These results have important policy implications for these 16 Latin American countries under study.

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  • Yang-Cheng Ralph Lu & Tsangyao Chang & Chi-Chen Chiu & Han-Wen Tzeng, 2011. "Revisiting purchasing power parity for 16 Latin American countries: panel SURADF tests," Applied Economics Letters, Taylor & Francis Journals, vol. 18(3), pages 251-255.
    • Handle: RePEc:taf:apeclt:v:18:y:2011:i:3:p:251-255
    DOI: 10.1080/13504850903559518
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    2. Jiang, Chun & Jian, Na & Liu, Tie-Ying & Su, Chi-Wei, 2016. "Purchasing power parity and real exchange rate in Central Eastern European countries," International Review of Economics & Finance, Elsevier, vol. 44(C), pages 349-358.
    3. Su, Chi-Wei & Tsangyao, Chang & Chang, Hsu-Ling, 2011. "Purchasing power parity for fifteen Latin American countries: Stationary test with a Fourier function," International Review of Economics & Finance, Elsevier, vol. 20(4), pages 839-845, October.
    4. He, Huizhen & Chou, Ming Che & Chang, Tsangyao, 2014. "Purchasing power parity for 15 Latin American countries: Panel SURKSS test with a Fourier function," Economic Modelling, Elsevier, vol. 36(C), pages 37-43.

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