Abstract

https://ssrn.com/abstract=280902
 
 

Citations (48)



 
 

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Purchasing Power Parity and the Real Exchange Rate


Mark P. Taylor


University of Warwick - Department of Economics; Centre for Economic Policy Research (CEPR)

Lucio Sarno


City University London - Sir John Cass Business School; Centre for Economic Policy Research (CEPR)

August 2001

CEPR Discussion Paper No. 2913

Abstract:     
We assess the progress made by the profession in understanding real exchange rate behaviour, through a selective and critical but nonetheless expository review of the literature. Our reading of the literature leads us to the main conclusions that purchasing power parity might be viewed as a valid long-run international parity condition when applied to bilateral exchange rates among major industrialized countries and that mean reversion in real exchange rates displays significant non-linearities. Further work investigating the effects of real shocks on the long-run equilibrium level also seems warranted.

Number of Pages in PDF File: 40

Keywords: Foreign exchange, purchasing power parity, real exchange rate

JEL Classification: F31


Date posted: August 22, 2001  

Suggested Citation

Taylor, Mark P. and Sarno, Lucio, Purchasing Power Parity and the Real Exchange Rate (August 2001). CEPR Discussion Paper No. 2913. Available at SSRN: https://ssrn.com/abstract=280902

Contact Information

Mark Peter Taylor
University of Warwick - Department of Economics ( email )
Coventry CV4 7AL
United Kingdom
+44 24 7657 3008 (Phone)
+44 24 7652 3032 (Fax)
Centre for Economic Policy Research (CEPR)
77 Bastwick Street
London, EC1V 3PZ
United Kingdom
Lucio Sarno (Contact Author)
City University London - Sir John Cass Business School ( email )
106 Bunhill Row
London, EC1Y 8TZ
United Kingdom
Centre for Economic Policy Research (CEPR)
77 Bastwick Street
London, EC1V 3PZ
United Kingdom
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