Testing Symmetry and Proportionality in PPP: A Panel-Data Approach

Kai Li ()

Journal of Business & Economic Statistics, 1999, vol. 17, issue 4, 409-18

Abstract: Purchasing power parity (PPP) is a proposition equating the nominal exchange rate to the ratio of the domestic to foreign price levels. This article employs Bayesian panel-data methods to test for PPP, in particular, the implied symmetry and proportionality conditions. Using a dataset of all the Organization for Economic Cooperation and Development member countries in the post-Bretton Woods era, I do not find support for symmetry and proportionality in PPP over time and across countries.

Date: 1999
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Persistent link: https://EconPapers.repec.org/RePEc:bes:jnlbes:v:17:y:1999:i:4:p:409-18

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