Convergence to Purchasing Power Parity at the Commencement of the Euro*

Claude Lopez and David Papell

Review of International Economics, 2007, vol. 15, issue 1, 1-16

Abstract: We investigate convergence towards purchasing power parity (PPP) within the eurozone and between the eurozone and its main partners using panel data methods. We find strong rejections of the unit‐root hypothesis, and therefore evidence of PPP, in the eurozone for different numéraire currencies, as well as in the eurozone plus the United States with the dollar as the numéraire currency, starting between 1996 and 1999. The process of convergence towards PPP, however, begins earlier, following the currency crises of 1992 and 1993, adoption of the Maastricht Treaty, and official completion of the Single Market.

Date: 2007
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https://doi.org/10.1111/j.1467-9396.2007.00631.x

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