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Purchasing Power Parity in Eastern European Countries: Further Evidence from Black Market Exchange Rates

Author

Listed:
  • Alper Aslan

    (Nevsehir University, Nevsehir, Turkey)

  • Ferit Kula

    (Erciyes University, Kayseri, Turkey)

Abstract

The purchasing power parity (PPP) has been amongst the most tested theories in the international finance literature. The empirical findings from the extant literature for the PPP hypothesis are mixed. This article applies univariate and panel Lagrange Multiplier (LM) unit root tests with one and two structural breaks to real exchange rates for six Eastern European countries. Both univariate and panel LM tests with structural breaks strongly suggest that PPP is valid hypothesis for Bulgaria, Czech Republic, Hungary, Poland, Romania and Russia.

Suggested Citation

  • Alper Aslan & Ferit Kula, 2011. "Purchasing Power Parity in Eastern European Countries: Further Evidence from Black Market Exchange Rates," The AMFITEATRU ECONOMIC journal, Academy of Economic Studies - Bucharest, Romania, vol. 13(29), pages 287-294, February.
    • Handle: RePEc:aes:amfeco:v:13:y:2011:i:29:p:287-294
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    References listed on IDEAS

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    1. Mina Baliamoune-Lutz, 2010. "Black and official exchange rates in Morocco: an analysis of their long-run behaviour and short-run dynamics (1974-1992)," Applied Economics, Taylor & Francis Journals, vol. 42(27), pages 3481-3490.
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    Cited by:

    1. SELMA Büyükkantarcı Tolgay & FERİT Kula, 2019. "Purchasing Power Parity Testing Unit Root Tests With Structural Break In Turkey," Revista Economica, Lucian Blaga University of Sibiu, Faculty of Economic Sciences, vol. 71(1), pages 89-98, March.
    2. Oguz OCAL, 2013. "Purchasing Power Parity in the Case of Romania: Evidence from Structural Breaks," International Journal of Economics and Financial Issues, Econjournals, vol. 3(4), pages 973-976.

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    More about this item

    Keywords

    PPP; Black Market Exchange Rates; Eastern European countries;
    All these keywords.

    JEL classification:

    • F31 - International Economics - - International Finance - - - Foreign Exchange

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