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Purchasing Power Parity and the Chinese Yuan

Author

Listed:
  • Richard Paul Gregory

    () (East Tennessee State University)

  • Gary Shelley

    () (East Tennessee State University)

Abstract

Results from unit root tests applied to the bilateral China - US real exchange rate do not support purchasing power parity between the two countries. However, tests of the real equivalent exchange rate for the Chinese yuan versus a traded-weighted basket of currencies support purchasing power parity. Due to severe non-normality, critical values for tests of the real equivalent exchange rate are obtained from the wild bootstrap.

Suggested Citation

  • Richard Paul Gregory & Gary Shelley, 2011. "Purchasing Power Parity and the Chinese Yuan," Economics Bulletin, AccessEcon, vol. 31(2), pages 1247-1255.
  • Handle: RePEc:ebl:ecbull:eb-11-00048
    as

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    File URL: http://www.accessecon.com/Pubs/EB/2011/Volume31/EB-11-V31-I2-P117.pdf
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    References listed on IDEAS

    as
    1. Tamim Bayoumi & Jaewoo Lee & Sarma Jayanthi, 2006. "New Rates from New Weights," IMF Staff Papers, Palgrave Macmillan, vol. 53(2), pages 1-4.
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    Citations

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    Cited by:

    1. Chan, Tze-Haw & Baharumshah, Ahmad Zubaidi, 2012. "Financial Integration between China and Asia Pacific Trading Partners: Parities Evidence from the First- and Second-generation Panel Tests," MPRA Paper 37801, University Library of Munich, Germany.
    2. Chan, Tze-Haw, 2011. "A structural modeling of exchange rate, prices and interest rates between Malaysia-China in the liberalization era," MPRA Paper 32955, University Library of Munich, Germany.

    More about this item

    Keywords

    China; purchasing power parity; unit root test; wild bootstrap;

    JEL classification:

    • F3 - International Economics - - International Finance

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