Purchasing Power Parity Revisited
50 Pages Posted: 8 Jan 2004
Date Written: December 2003
This paper presents a selective survey on some recent empirical attempts to test the validity of Purchasing Power Parity (PPP) to explain exchange-rate movements in the main currencies, as well as the econometric methodology used in such tests. Finally, we offer some encouraging results regarding the forecastability of exchange rate using PPP.
Keywords: Exchange rates, Purchasing Power parity, Cointegration
JEL Classification: F31, C32, C33
Suggested Citation: Suggested Citation