Purchasing power parity in an emerging market economy: a long- span study for Chile

Cesar Calderon () and Roberto Duncan

Estudios de Economia, 2003, vol. 30, issue 1 Year 2003, 103-132

Abstract: Recent research has found evidence that supports the purchasing power parity (PPP) condition in developed countries using very long-span data, while evidence for developing countries is almost nonexistent. This paper tries to fulfill this void by testing the validity of PPP as a long run equilibrium condition for Chile, using data, since its birth as a nation, developed by Díaz, Lüders and Wagner (2003). A battery of unit-root and cointegration tests is applied. We found evidence in favor of PPP. Results are robust to changes in the domestic price index, to changes in the sample period, and to the econometric technique applied.

Keywords: Purchasing power parity; real exchange rate; unit root tests; cointegration; and structural breaks. (search for similar items in EconPapers)
JEL-codes: C12 C29 F41 (search for similar items in EconPapers)
Date: 2003
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Citations: View citations in EconPapers (24)

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Working Paper: Purchasing Power Parity in an Emerging Market Economy: A Long-Span Study for Chile (2003)
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Persistent link: https://EconPapers.repec.org/RePEc:udc:esteco:v:30:y:2003:i:1:p:103-132

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