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ARDL Approach to Test the Productivity Bias Hypothesis

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  • Mohsen Bahmani‐Oskooee
  • A. B. M. Nasir

Abstract

The productivity bias hypothesis states that a relatively more productive country should experience a real appreciation of its currency. Most studies in the literature that have tested the hypothesis have employed cross‐sectional data. Only a few studies have used time‐series data and they have tested the hypothesis for only a small number of countries. In this paper the authors test the hypothesis by using time‐series data over the 1960–90 period for a sample of 44 countries and with a relatively new method of cointegration known as the ARDL approach. For most countries there is strong evidence supporting the hypothesis.

Suggested Citation

  • Mohsen Bahmani‐Oskooee & A. B. M. Nasir, 2004. "ARDL Approach to Test the Productivity Bias Hypothesis," Review of Development Economics, Wiley Blackwell, vol. 8(3), pages 483-488, August.
    • Handle: RePEc:bla:rdevec:v:8:y:2004:i:3:p:483-488
    DOI: 10.1111/j.1467-9361.2004.00247.x
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    References listed on IDEAS

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    3. Menzie D. Chinn, 2000. "The Usual Suspects? Productivity and Demand Shocks and Asia–Pacific Real Exchange Rates," Review of International Economics, Wiley Blackwell, vol. 8(1), pages 20-43, February.
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