Convergence to Purchasing Power Parity at the Commencement of the Euro

Claude Lopez () and David Papell ()

Macroeconomics from EconWPA

Abstract: We investigate convergence towards Purchasing Power Parity (PPP) within the Euro Zone and between the Euro Zone and its main partners using panel data methods that incorporate serial and contemporaneous correlation. We find strong rejections of the unit root hypothesis, and therefore evidence of PPP, in the Euro Zone for different numeraire currencies, as well as in the Euro Zone plus the United States, with the US dollar as the numeraire currency, starting between 1996 and 1999. The process of convergence towards PPP, however, begins earlier, generally in 1992 or 1993 following the adoption of the Maastricht Treaty.

Keywords: PPP; EURO; PANEL; UNIT; ROOT (search for similar items in EconPapers)
JEL-codes: C32 C33 F31 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ifn
Date: 2003-10-08
Note: Type of Document - Acrobat PDF; prepared on PC; to print on A4 ; pages: 19; figures: included
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http://129.3.20.41/eps/mac/papers/0310/0310008.pdf (application/pdf)

Related works:
Working Paper: Convergence to Purchasing Power Parity at the Commencement of the Euro (2003)
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