Purchasing Power Parity in the Long Run: A Test of the Dollar/Pound Exchange Rate (1890-1978)

Hali Edison ()

Journal of Money, Credit and Banking, 1987, vol. 19, issue 3, 376-87

Abstract: This paper tests the Purchasing Power Parity (PPP) hypothesis by analyzing t he long-run tendency of the dollar/pound exchange rate using data sin ce 1890. Two different models are considered: (1) a na ive model and (2) a modified monetary model. The conditions of propor tionality and symmetry cannot be rejected when using the naive model. The final results using the monetary model, however, indicate that t he existence of permanent deviations from PPP cannot be ruled out. Copyright 1987 by Ohio State University Press.

Date: 1987
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Persistent link: https://EconPapers.repec.org/RePEc:mcb:jmoncb:v:19:y:1987:i:3:p:376-87

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