Exchange rate uncertainty and deviations from Purchasing Power Parity: Evidence from the G7 area
Michael Arghyrou (),
Andros Gregoriou () and
Panayiotis Pourpourides ()
No E2009/23, Cardiff Economics Working Papers from Cardiff University, Cardiff Business School, Economics Section
Arghyrou, Gregoriou and Pourpourides (2009) argue that exchange rate uncertainty causes deviations from the law of one price. We test this hypothesis on aggregate data from the G7-area. We find that exchange rate uncertainty explains to a significant degree deviations from Purchasing Power Parity.
Keywords: Purchasing power parity; exchange rate uncertainty (search for similar items in EconPapers)
JEL-codes: F31 F41 (search for similar items in EconPapers)
Pages: 14 pages
New Economics Papers: this item is included in nep-cba, nep-ifn and nep-opm
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Persistent link: https://EconPapers.repec.org/RePEc:cdf:wpaper:2009/23
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