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Purchasing Power Parity (PPP) in a Transition Economy - Cambodia: Empirical Evidence from Bilateral Exchange Rates

  • Tuck Cheong Tang
  • Venus Khim-Sen Liew

This study contributes to the existing literature by examining the validity of PPP hypothesis for Cambodia. The standard unit root tests (ADF and PP) and the panel unit root tests fail to support PPP hypothesis for the nine Cambodia’s trading partners. The unit root tests with structural break support the PPP hypothesis for the bilateral real exchange rates of Euro, Indonesia rupiah, Malaysia ringgit, and Singapore dollar. This finding is found to be relevant for ‘de-dollarization’ strategy in Cambodia, and in responding to recent global financial crisis (2007-2008).

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Paper provided by Monash University, Department of Economics in its series Monash Economics Working Papers with number 29-09.

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Length: 23 pages
Date of creation: Aug 2009
Date of revision:
Handle: RePEc:mos:moswps:2009-29
Contact details of provider: Postal: Department of Economics, Monash University, Victoria 3800, Australia
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  1. Levent, Korap, 2009. "Are real exchange rates mean reverting? Evidence from a panel of OECD countries," MPRA Paper 19527, University Library of Munich, Germany.
  2. Levin, Andrew & Lin, Chien-Fu & James Chu, Chia-Shang, 2002. "Unit root tests in panel data: asymptotic and finite-sample properties," Journal of Econometrics, Elsevier, vol. 108(1), pages 1-24, May.
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