Testing for PPP in Australia: Evidence from unit root test against nonlinear trend stationarity alternatives

Juan Cuestas and Paulo Regis

Economics Bulletin, 2008, vol. 3, issue 27, 1-8

Abstract: This paper tests for the empirical fulfilment of PPP in Australia (1977-2004). Previous research focuses on the presence of structural breaks and fails to find any support for PPP (Darne and Hoarau, 2008, Henry and Olekalns, 2002). In contrast, we find that the real exchange rate is stationary once we account for a more general specification of the nonlinear deterministic components based on a Chebishev polynomials approximation.

Keywords: PPP (search for similar items in EconPapers)
JEL-codes: C2 F0 (search for similar items in EconPapers)
Date: 2008-05-16
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Citations: View citations in EconPapers (11)

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