Purchasing power parity revisited: evidence from old and new tests for an organisation for economic co-operation and development panel

Julian Ramajo and Montserrat Ferré

Applied Economics, 2010, vol. 42, issue 17, 2243-2260

Abstract: The objective of this article is to study long-run Purchasing Power Parity (PPP) for a panel of 21 Organisation for Economic Co-operation and Development (OECD) countries from the end of the Bretton Woods era by applying a wide range of the econometric techniques available. This will allow us to present a comprehensive up to date examination of the empirical validity of PPP, covering the weak and strong versions of the hypothesis with individual and panel analysis, including the absence or presence of cross-dependency, the linear or nonlinear behaviour of the real exchange rates and the degree of persistence. Overall, the results provide evidence in favour of PPP.

Date: 2010
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DOI: 10.1080/00036840701765486

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