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Purchasing Power Parity Across States and Goods Within Australia

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Author Info
Sheen, J.
Chaudhuri, K.

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Abstract

Panel unit root tests show that intranational purchasing power parity (PPP) cannot be rejected across major cities in Australia over the period from 1972 to 1999. The persistence of deviations in response to shocks is low, as measured by the estimated exact half-life of 5 to 7 quarters. This is much lower than results for similar tests done on US cities, and for international PPP tests. The food CPI is largely responsible for the fast convergent results for city CPIs. Intranational PPP was rejected for the floating exchange rate period from 1984 to 1991 when inflation was high and not specifically targeted by the central bank.

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Publisher Info
Paper provided by Sydney - Department of Economics in its series Papers with number 2001-2.

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Length: 16 pages
Date of creation: 2001
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Handle: RePEc:fth:sydnec:2001-2

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Postal: THE UNIVERSITY OF SYDNEY, DEPARTMENT OF ECONOMICS, 2006 AUSTRALIA.
Phone: 61 +2 9351 5055
Fax: 61 +2 9351 4341
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Web page: http://www.econ.usyd.edu.au/econ/
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Related research
Keywords: FINANCIAL POLICY INFLATION EXCHANGE RATE

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Find related papers by JEL classification:
F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation

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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.:

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Cited by:
(explanations, 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.)

  1. Ajit Dayanandan & Mukesh Ralhan, 2005. "Price Index Convergence Among Provinces and Cities of Canada: 1978 - 2001," Econometrics Working Papers 0504, Department of Economics, University of Victoria. [Downloadable!]
  2. Farley Grubb, 2008. "Testing for the Economic Impact of the U.S. Constitution: Purchasing Power Parity across the Colonies versus across the States, 1748-1811," NBER Working Papers 13836, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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