The Validity of Purchasing Power Parity Hypothesis in Middle East and Northern Africa Countries
Ferit Kula () and
Alper Aslan ()
Journal for Economic Forecasting, 2010, issue 4, 125-131
This paper re-examines the Purchasing Power Parity (PPP) hypothesis in which the endogenously determined break points are incorporated in thirteen major Middle East and Northern Africa (MENA) countries by using official and black market exchange rates data over 1970-1998. We utilize Lagrange Multiplier (LM) unit root test that endogenously determines structural breaks in level and trend. We find evidence of PPP for all countries using official and/or black market real exchange rates at the 10% level or better.
Keywords: Purchasing Power Parity (PPP); Real exchange rate; Black market; Exchange rates; Unit-root test; Structural break (search for similar items in EconPapers)
JEL-codes: F31 C22 C23 (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:rjr:romjef:v::y:2010:i:4:p:125-131
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