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Modeling purchasing power parity using co-integration: evidence from Turkey

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  • Levent, Korap

Abstract

In this study, we consruct a co-integration model of the Turkish economy using high frequency data to examine the validity of the purchasing power parity (PPP) theory. The ex-post estimation results derived from the analysis of monthly observations for the January 1987 – December 2004 period generally support the use of the PPP theory in predicting the movement of currency values in the Turkish economy.The methodology developed in this study can be used in other countries to ensure the success of economic policies that depend on the existence of PPP relationship.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 19584.

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Date of creation: Sep 2007
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Publication status: Published in The Journal of American Academy of Business, Cambridge 2.11(2007): pp. 51-57
Handle: RePEc:pra:mprapa:19584

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Keywords: Purchasing Poer Parity ; Cointegration ; Turkish Economy ;

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References

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Cited by:
  1. Levent, Korap, 2008. "Exchange rate determination of TL/US$: a co-integration approach," MPRA Paper 19659, University Library of Munich, Germany.
  2. Ozgur Aslan & Levent Korap, 2009. "Are real exchange rates mean reverting? Evidence from a panel of OECD countries," Applied Economics Letters, Taylor & Francis Journals, vol. 16(1), pages 23-27.

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