IDEAS home Printed from https://ideas.repec.org/a/taf/apeclt/v19y2012i18p1851-1855.html
   My bibliography  Save this article

PPP and nonlinearity of real exchange rates: new evidence from transition economies

Author

Listed:
  • Jani Bekő
  • Alenka Kavkler
  • Darja Boršič

Abstract

In this article, we investigate the Purchasing Power Parity (PPP) concept by utilizing a database of monthly real exchange rates from 12 Central and Eastern European economies with respect to different numeraire currencies. Owing to the elaborated limitations of linear specifications by verifying this exchange rate theory, we apply a nonlinear unit root test based on the Exponential Smooth Transition Autoregressive (ESTAR) model proposed by Kapetanios et al . (KSS; 2003). Our analysis shows that after taking into account the nonlinear reversion of real exchange rates of European transition economies with respect to the euro, the validity of PPP is confirmed for the majority of countries in the sample.

Suggested Citation

  • Jani Bekő & Alenka Kavkler & Darja Boršič, 2012. "PPP and nonlinearity of real exchange rates: new evidence from transition economies," Applied Economics Letters, Taylor & Francis Journals, vol. 19(18), pages 1851-1855, December.
  • Handle: RePEc:taf:apeclt:v:19:y:2012:i:18:p:1851-1855
    DOI: 10.1080/13504851.2012.667544
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/13504851.2012.667544
    Download Restriction: Access to full text is restricted to subscribers.

    As the access to this document is restricted, you may want to search for a different version of it.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:apeclt:v:19:y:2012:i:18:p:1851-1855. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Chris Longhurst). General contact details of provider: http://www.tandfonline.com/RAEL20 .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.