A comment on ‘Testing the validity of quasi-PPP hypothesis: evidence from a recent panel unit-root test with structural breaks’

Daniel Ventosa-Santaulària and M. Gómez-Zald�var
Authors registered in the RePEc Author Service: Manuel Gómez-Zaldívar

Applied Economics Letters, 2013, vol. 20, issue 2, 111-113

Abstract: In a recent study, Guloglu et al . (2011) took 18 Turkish real exchange rate series and used a panel unit-root test, which allows for structural breaks in the level and the trend of the real exchange rate. When the practitioner allows for structural breaks, the rejection of the null hypothesis of unit root in the real exchange rate does not imply that Purchasing Power Parity (PPP) holds. The authors claim that they found evidence of Quasi-PPP (Q-PPP). Yet, the latter does not include either linear trend or trend breaks. Their results cannot be considered evidence of either Trend-PPP (T-PPP) or Trend-Qualified PPP (TQ-PPP), since both exclude trend shifts.

Date: 2013
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Citations: View citations in EconPapers (2)

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DOI: 10.1080/13504851.2012.684778

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