Testing the purchasing power parity in oil‐exporting countries

Mohsen Mehrara

OPEC Energy Review, 2007, vol. 31, issue 4, 249-260

Abstract: Using panel unit root and panel cointegration tests, we investigate the purchasing power parity (PPP) for oil‐exporting countries. In addition, we also employ a seemingly unrelated regression estimator to account for possible cross‐sectional effect. The test results overwhelmingly reject the weak and strong versions of PPP hypothesis. It seems that the Dutch disease and repeated episodes of booms and busts in oil prices transmitted to the real exchange rate have made oil‐dependent countries so apt to non‐stationary real exchange rate.

Date: 2007
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https://doi.org/10.1111/j.1468-0076.2007.00186.x

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