Purchasing Power Parity and the Chinese Yuan

Richard Gregory () and Gary Shelley ()
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Richard Gregory: East Tennessee State University
Gary Shelley: East Tennessee State University

Economics Bulletin, 2011, vol. 31, issue 2, 1247-1255

Abstract: Results from unit root tests applied to the bilateral China - US real exchange rate do not support purchasing power parity between the two countries. However, tests of the real equivalent exchange rate for the Chinese yuan versus a traded-weighted basket of currencies support purchasing power parity. Due to severe non-normality, critical values for tests of the real equivalent exchange rate are obtained from the wild bootstrap.

Keywords: China; purchasing power parity; unit root test; wild bootstrap (search for similar items in EconPapers)
JEL-codes: F3 (search for similar items in EconPapers)
Date: 2011-04-22
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Citations: View citations in EconPapers (6)

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