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Testing PPP for Asian economies during the recent floating period

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  • Ping Wang

Abstract

The validity of purchasing power parity (PPP) is examined between seven Asian countries and the US during the flexible exchange rate period, in the framework of the Johansen cointegration approach with and without restrictions of the PPP parameters. It is found that a long-run comovement exists between the nominal exchange rate and the prices, but the PPP vector does not exist in the cointegration space and the nominal exchange rate and domestic and foreign prices do not move one by one as implied by the theoretical PPP.

Suggested Citation

  • Ping Wang, 2000. "Testing PPP for Asian economies during the recent floating period," Applied Economics Letters, Taylor & Francis Journals, vol. 7(8), pages 545-548.
  • Handle: RePEc:taf:apeclt:v:7:y:2000:i:8:p:545-548
    DOI: 10.1080/13504850050033355
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    Citations

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    Cited by:

    1. Arize, Augustine C. & Malindretos, John & Nam, Kiseok, 2010. "Cointegration, dynamic structure, and the validity of purchasing power parity in African countries," International Review of Economics & Finance, Elsevier, vol. 19(4), pages 755-768, October.
    2. Angelos Kanas, 2009. "Real exchange rates and developing countries," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 14(3), pages 280-299.
    3. Arize, Augustine C. & Malindretos, John & Ghosh, Dilip, 2015. "Purchasing power parity-symmetry and proportionality: Evidence from 116 countries," International Review of Economics & Finance, Elsevier, vol. 37(C), pages 69-85.
    4. Anwar Al-Gasaymeh & John Kasem, 2016. "Long-Run Purchasing Power Parity And Exchange Rates: Evidence From The Middle East," The International Journal of Business and Finance Research, The Institute for Business and Finance Research, vol. 10(2), pages 41-53.
    5. Nongnuch Tantisantiwong, 2013. "Price Transmission and Effects of Exchange Rates on Domestic Commodity Prices via Offshore and Currency Hedging," Dundee Discussion Papers in Economics 278, Economic Studies, University of Dundee.
    6. Mark Holmes & Ping Wang, 2006. "Asymmetric adjustment towards long-run PPP: Some new evidence for Asian economies," International Economic Journal, Taylor & Francis Journals, vol. 20(2), pages 161-177.
    7. Ping Wang & Paul Dunne, 2000. "Sources of movements in real exchange rates-evidence from east Asian economies," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 136(1), pages 158-170, March.
    8. Zurbruegg, R. & Allsopp, L., 2004. "Purchasing power parity and the impact of the East Asian currency crisis," Journal of Asian Economics, Elsevier, vol. 15(4), pages 739-758, August.
    9. Simón Sosvilla-Rivero & Emma García, "undated". "Purchasing Power Parity Revisited," Working Papers 2003-20, FEDEA.

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