PPP in Latin America: A Cointegration Test of the Casselian Hypothesis

Posted: 21 Jul 1998

See all articles by Frank R. Gunter

Frank R. Gunter

Lehigh University - College of Business

Carolyn Fabian Stumph

Indiana University Purdue University Fort Wayne

Abstract

This study examines the Casselian hypothesis that the removal of government restrictions on international trade tends to lead to purchasing power parity even if other barriers to trade continue to exist. Twenty pairs of countries within the Mercosur and the Andean trade agreements are tested for PPP using Johansen's cointegration technique. The results are compared both with the same pairs of countries before trade liberalization and with twenty-five pairs of countries outside the Mercosur and the Andean agreements. The results are consistent with the Casselian hypothesis.

JEL Classification: N76, F14

Suggested Citation

Gunter, Frank R. and Fabian Stumph, Carolyn, PPP in Latin America: A Cointegration Test of the Casselian Hypothesis. Available at SSRN: https://ssrn.com/abstract=37880

Frank R. Gunter (Contact Author)

Lehigh University - College of Business ( email )

Bethlehem, PA 18015
United States
610-758-4540 (Phone)

Carolyn Fabian Stumph

Indiana University Purdue University Fort Wayne ( email )

2101 E Coliseum Boulevard East
Fort Wayne, IN 46805-1499
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Abstract Views
1,171
PlumX Metrics