Asymmetry in the Purchasing Power Parity in the Context of South Africa

Reuben Jerome Kisten (), Simiso Msomi (), Paul-Francois Muzindutsi (), Ntokozo Nzimande and Malibongwe Cyprian Nyati ()
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Reuben Jerome Kisten: University of KwaZulu Natal, South Africa
Simiso Msomi: University of KwaZulu Natal, South Africa
Paul-Francois Muzindutsi: University of KwaZulu Natal, South Africa
Malibongwe Cyprian Nyati: Tshwane University of Technology, South Africa

Management and Economics Review, 2025, vol. 10, issue 1, 103-118

Abstract: This paper investigated whether the purchasing power parity (PPP) hypothesis holds between South Africa and the United States of America and to determine if there is an asymmetry in the PPP from 1980 to 2020. A decomposition technique was applied to create key variables in which unit root tests such as ADF, PP, and the KPSS were employed. The results of all three tests found that the macro variables exhibited stationary behaviour, thus validating the PPP. Furthermore, by decomposing the variable into positive and negative components, the study reveals that the convergence to equilibrium is asymmetric. By showing this, we also confirmed the existence of asymmetry within the macro variables, which provides important implications for policymakers.

Keywords: asymmetry; exchange rate; purchasing power parity. (search for similar items in EconPapers)
JEL-codes: E52 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:rom:merase:v:10:y:2025:i:1:p:103-118

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