Re-examining purchasing power parity for selected emerging markets and African countries

Pelin Oge Guney (), Erdinc Telatar and Mübariz Hasanov

Applied Economics Letters, 2012, vol. 19, issue 2, 139-144

Abstract: The validity of Purchasing Power Parity (PPP) is re-examined using data for some emerging market economies and African countries, extending recent works of Doğanlar et al. (2009) and Chang et al. (2010), respectively. For this purpose, we apply new unit root tests that allow for nonlinearities and structural change in the data-generating process. The results of this study suggest that although linear unit root test provides evidence in favour of PPP only in a few cases, the new nonlinear unit root tests suggest that the PPP proposition holds in majority of the sample countries.

Date: 2012
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DOI: 10.1080/13504851.2011.570698

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