Revisiting long-run purchasing power parity with asymmetric adjustment for G-7 countries

Tsangyao Chang, Chia-Hao Lee, Pei-I Chou and Dai-Piao Tang

Japan and the World Economy, 2011, vol. 23, issue 4, 259-264

Abstract: In this study, we applied a threshold cointegration test advanced by Enders and Siklos (2001) to investigate the properties of asymmetric adjustment on long-run purchasing power parity (PPP) in G-7 countries between January 1994 and April 2010. Although there was strong evidence of long-run PPP for these G-7 countries, with the exception of Canada, the adjustment mechanism was asymmetric. These results have important policy implications for G-7 countries.

Keywords: Threshold cointegration test; Purchasing power parity; Asymmetric adjustment; G-7 countries; Policy implications (search for similar items in EconPapers)
JEL-codes: C22 F31 (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (8)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:japwor:v:23:y:2011:i:4:p:259-264

DOI: 10.1016/j.japwor.2011.09.001

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