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Testing the purchasing power parity in oil-exporting countries

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  • Mohsen Mehrara

Abstract

Using panel unit root and panel cointegration tests, we investigate the purchasing power parity (PPP) for oil-exporting countries. In addition, we also employ a seemingly unrelated regression estimator to account for possible cross-sectional effect. The test results overwhelmingly reject the weak and strong versions of PPP hypothesis. It seems that the Dutch disease and repeated episodes of booms and busts in oil prices transmitted to the real exchange rate have made oil-dependent countries so apt to non-stationary real exchange rate. Copyright 2007 Organization of the Petroleum Exporting Countries.

Suggested Citation

  • Mohsen Mehrara, 2007. "Testing the purchasing power parity in oil-exporting countries," OPEC Energy Review, Organization of the Petroleum Exporting Countries, vol. 31(4), pages 249-260, December.
  • Handle: RePEc:bla:opecrv:v:31:y:2007:i:4:p:249-260
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    File URL: http://www.blackwell-synergy.com/doi/abs/10.1111/j.1468-0076.2007.00186.x
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    Cited by:

    1. Saboori, Behnaz & Sulaiman, Jamalludin, 2013. "Environmental degradation, economic growth and energy consumption: Evidence of the environmental Kuznets curve in Malaysia," Energy Policy, Elsevier, vol. 60(C), pages 892-905.
    2. Mario Gómez Aguirre & José Carlos A. Rodríguez Chávez, 2012. "Análisis de la paridad del poder de compra: evidencia empírica entre México y Estados Unidos," Estudios Económicos, El Colegio de México, Centro de Estudios Económicos, vol. 27(1), pages 169-207.

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