Analysis of Purchasing power parity with data for Macedonia

Dushko Josheski () and Cane Koteski

MPRA Paper from University Library of Munich, Germany

Abstract: This paper examines PPP parity theory with data for Macedonia. We test the empirical consensus in this literature that real exchange rates tend towards PPP in the very long run, also we use co-integration Engle-Granger method and error correction mechanism. The hypothesis we test that PPP theory holds in long run in the case of Macedonia, and this hypothesis is proven to be true.

Keywords: PPP; Exchange rate; Co-integration; unit root; stationarity (search for similar items in EconPapers)
JEL-codes: E0 G0 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-opm
Date: 2011-06-01, Revised 2011
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Persistent link: http://EconPapers.repec.org/RePEc:pra:mprapa:32023

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