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Food prices and long-run purchasing power parity in Africa

Listed author(s):
  • Joseph Kargbo
Registered author(s):

    The purchasing power parity (PPP) theory is a cornerstone of exchange rate models in international economics. PPP is very important for two main reasons: first, it can serve as a prediction model for exchange rates, and second, it can serve as a benchmark in judging the level of exchange rate movements. This article utilised the Johansen cointegration technique in examining whether or not there is empirical support for long-run PPP in Africa. Annual data were used for exchange rates and food price indices in 25 countries covering the 1958-97 period. The empirical evidence showed strong support for long-run PPP in Africa, thereby providing wider acceptance for the applicability of PPP in exchange rate and other macroeconomic adjustment policies.

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    Article provided by Taylor & Francis Journals in its journal Development Southern Africa.

    Volume (Year): 20 (2003)
    Issue (Month): 3 ()
    Pages: 321-336

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    Handle: RePEc:taf:deveza:v:20:y:2003:i:3:p:321-336
    DOI: 10.1080/0376835032000108158
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