Efficiency of the black market for foreign exchange and PPP: the case of the Dominican Republic
Efficiency of the black market for foreign exchange in a developing country can be assessed by testing whether that market complies with the 'relative' version of the purchasing power parity hypothesis. This paper applies nonstationarity and cointegration to investigate this hypothesis for the Dominican Republic. Both the Engle-Granger and Johansen techniques support cointegration, so the black market for foreign exchange in the Dominican Republic is efficient.
Volume (Year): 6 (1999)
Issue (Month): 3 ()
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