Purchasing Power Parity Under the Current Float

8 Pages Posted: 28 Apr 2009 Last revised: 7 May 2009

See all articles by Songul Kakilli Acaravci

Songul Kakilli Acaravci

Mustafa Kemal University; Mustafa Kemal University

Ali Acaravci

Mustafa Kemal University

Date Written: 2007

Abstract

Purchasing power parity (PPP) is an important benchmark model in international finance. Recent literature emphasizes that panel unit root tests have higher power than univariate unit root tests. The results from the ADF unit root test also support the recent literature. Using four panel data unit root tests for the 1990:1 - 2006:3 period, we re-examine the PPP both for developed countries and emerging market economies during the floating exchange rate period. Our empirical results fail to support long-run PPP for both developed countries and emerging market economies.

Keywords: PPP, panel unit root tests, developed countries, emerging market economies

JEL Classification: C22, C23, E31, F31

Suggested Citation

Acaravci, Songul Kakilli and Acaravci, Songul Kakilli and Acaravci, Ali, Purchasing Power Parity Under the Current Float (2007). Available at SSRN: https://ssrn.com/abstract=1395924 or http://dx.doi.org/10.2139/ssrn.1395924

Songul Kakilli Acaravci

Mustafa Kemal University ( email )

Hatay
Turkey

Mustafa Kemal University ( email )

Hatay
Turkey

Ali Acaravci (Contact Author)

Mustafa Kemal University ( email )

Hatay
Turkey