Purchasing power parity for East-Asia countries: further evidence based on panel stationary test with multiple structural breaks

Tsangyao Chang, Ding Li, Yang-Cheng Lu and Chia-Hao Lee

Applied Economics, 2011, vol. 43, issue 24, 3289-3298

Abstract: In this article, we re-investigate the validity of Purchasing Power Parity (PPP) for a sample of 10 East-Asia countries over the period of January 1987 to June 2005, using a recently developed econometric technique of the panel stationary test with multiple structural breaks, proposed by Carrion-i-Silvestre et al. (2005). This test considers multiple structural breaks positioned at different unknown dates and a different number of breaks for each individual. Empirical evidence shows that the PPP holds true for half of 10 East-Asia countries during the research period. Our results have important policy implications for these 10 East-Asia countries under study.

Date: 2011
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DOI: 10.1080/00036840903508403

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