Law of One Price

Lawrence H. Officer ()
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Lawrence H. Officer: University of Illinois at Chicago

Chapter Chapter 6 in Essays in Economic History, 2022, pp 101-124 from Springer

Abstract: Abstract In contrast to conventional, disaggregative testing of the law of one price, an aggregative approach is adopted. Using a tradable/nontradable level of aggregation, a model is developed to test equality of the prices of tradables and nontradables domestically and equality of the price of tradables internationally. The disaggregative approach exhibits biases that lead to rejection of the law of one price. In contrast, the results of the aggregative technique for the law of one price are strongly positive and the limitations of the approach are found not to overcome its findings.

Keywords: Law of one price; Tradables; Nontradables; Purchasing power parity (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-3-030-95925-8_6

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DOI: 10.1007/978-3-030-95925-8_6

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