 Purchasing Power Parity in transition economies: evidence from the Commonwealth of Independent StatesErdinc Telatar and Mübariz Hasanov Post-Communist Economies, 2009, vol. 21, issue 2, 157-173 Abstract: This article tests the validity of Purchasing Power Parity (PPP) for Commonwealth of Independent States (CIS) countries. For this purpose we test whether the real exchange rate series of 10 CIS countries vis-a-vis the US dollar follow a stationary process. Considering the fact that the CIS countries have undergone major structural changes during the transition period, in addition to conventional unit root tests, we employ recently developed unit root tests that allow for structural breaks and non-linearities. When possible structural changes and non-linearities are not taken into account, the null hypothesis of unit root is rejected only in two out of 10 series. However, allowing for structural breaks and/or non-linearities in the data generating process results in more rejection of the null hypothesis of unit root. All in all, our results provide evidence in favour of the PPP hypothesis in these transition countries. Date: 2009 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:taf:pocoec:v:21:y:2009:i:2:p:157-173 Ordering information: This journal article can be ordered from DOI: 10.1080/14631370902778468 Access Statistics for this article Post-Communist Economies is currently edited by Roger Clarke More articles in Post-Communist Economies from Taylor & Francis Journals |
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