An Alternative Test of Purchasing Power Parity
Document Type
Article
Publication Date
8-1-2006
Description
The Fisher and Seater [Fisher, M.E. and Seater, J.J., 1993. Long run neutrality and superneutrality in an ARIMA framework. American Economic Review 83, 402-415.] methodology is applied to Taylor's [Taylor, A.T., 2002. A century of purchasing power parity. Review of Economics and Statistics 84, 139-150.] data to test for purchasing power parity. Generally, the evidence is supportive of PPP. Further, FS test statistics have no size distortion problem and test power is improved with longer samples.
Citation Information
Wallace, Frederick; and Shelley, Gary L.. 2006. An Alternative Test of Purchasing Power Parity. Economics Letters. Vol.92(2). 177-183. https://doi.org/10.1016/j.econlet.2006.01.033 ISSN: 0165-1765