Half‐lives of Deviations from PPP: Contrasting Traded and Nontraded Components of Consumption Baskets

Jaebeom Kim

Review of International Economics, 2004, vol. 12, issue 1, 162-168

Abstract: The paper examines the convergence question by contrasting the half‐lives of deviations from purchasing power parity (PPP) across traded and nontraded goods in an exchange rate model with sticky prices. In particular, empirical results show that in most cases the half‐lives of PPP deviations for traded goods are shorter than those for total consumption and for nontraded goods.

Date: 2004
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