Productivity Bias Hypothesis: Evidence from South Asia

12 Pages Posted: 24 Apr 2015

See all articles by Sajid Anwar

Sajid Anwar

University of the Sunshine Coast - School of Business

Syed Zahid Ali

Lahore University of Management Sciences

Date Written: April 24, 2015

Abstract

Most existing studies have attempted to test the productivity bias hypothesis by making use of the cross-section data. This paper utilizes country level time series data from Penn World Tables to examine the productivity bias hypothesis for five South Asian economies (namely, Bangladesh, India, Nepal, Pakistan and Sri Lanka). We make use of Johansen’s cointegration approach and vector error correction modelling. The empirical analysis presented in this paper shows that purchasing power parity theory holds for all countries considered. However, the productivity bias hypothesis appears to hold only in the case of Bangladesh and Nepal.

Keywords: Purchasing power parity, Exchange rate determination, Productivity bias hypothesis; South Asia

JEL Classification: E44, F36, F47

Suggested Citation

Anwar, Sajid and Ali, Syed Zahid, Productivity Bias Hypothesis: Evidence from South Asia (April 24, 2015). Applied Economics Letters, Forthcoming, Available at SSRN: https://ssrn.com/abstract=2598385

Sajid Anwar (Contact Author)

University of the Sunshine Coast - School of Business ( email )

90 Sippy Downs Drive
Sippy Downs, QLD 4556
Australia

Syed Zahid Ali

Lahore University of Management Sciences ( email )

Lahore Cantt, Punjab 70010
Pakistan
92-42-5722670 (Phone)
92-42-5722591 (Fax)

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