Real Disturbances, Relative Prices, and Purchasing Power Parity
AbstractThis paper tests a modified version of Purchasing Power Parity, which hypothesizes that real shocks that alter equilibrium relative prices between tradables and non-tradables are responsible for the deviations from purchasing power parity. Using cointegration/error-correction methods and quarterly data from the post Bretton Woods period, we find supportive evidence that productivity, government spending, and real world oil price might account for deviations from purchasing power parity.
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Bibliographic InfoPaper provided by EconWPA in its series International Finance with number 9502002.
Date of creation: 22 Feb 1995
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Other versions of this item:
- Dibooglu, Selahattin, 1996. "Real disturbances, relative prices and purchasing power parity," Journal of Macroeconomics, Elsevier, vol. 18(1), pages 69-87.
- F3 - International Economics - - International Finance
- F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance
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