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Purchasing power parity with nonlinear and asymmetric smooth adjustment for the Middle Eastern countries

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  • Tsangyao Chang
  • Yu-Shao Liu
  • Chi-Wei Su

Abstract

This empirical note uses a simple and powerful nonlinear unit root test proposed by Sollis (2009) to test the validity of Purchasing Power Parity (PPP) for Middle Eastern countries. Empirical test results indicate that PPP is valid for most of these Middle Eastern countries, with the exception of Bahrain. These results have important policy implications for the Middle Eastern countries under study.

Suggested Citation

  • Tsangyao Chang & Yu-Shao Liu & Chi-Wei Su, 2012. "Purchasing power parity with nonlinear and asymmetric smooth adjustment for the Middle Eastern countries," Applied Economics Letters, Taylor & Francis Journals, vol. 19(5), pages 487-491, March.
    • Handle: RePEc:taf:apeclt:v:19:y:2012:i:5:p:487-491
    DOI: 10.1080/13504851.2011.587756
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    References listed on IDEAS

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