Convergence to Purchasing Power Parity at the Commencement of the Euro

Claude Lopez and David Papell

University of Cincinnati, Economics Working Papers Series from University of Cincinnati, Department of Economics

Abstract: We investigate convergence towards Purchasing Power Parity (PPP) within the Euro Zone and between the Euro Zone and its main partners using panel data methods that incorporate serial and contemporaneous correlation. We find strong rejections of the unit root hypothesis, and therefore evidence of PPP, in the Euro Zone for different numeraire currencies, as well as in the Euro Zone plus the United States, with the US dollar as the numeraire currency, starting between 1996 and 1999. The process of convergence towards PPP, however, begins earlier, generally in 1992 or 1993 following the adoption of the Maastricht Treaty.

Pages: 19 pages
Date: 2003-10
New Economics Papers: this item is included in nep-eec, nep-ifn, nep-mac, nep-mon and nep-rmg
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Citations: View citations in EconPapers (4)

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Related works:
Journal Article: Convergence to Purchasing Power Parity at the Commencement of the Euro* (2007)
Working Paper: Convergence to Purchasing Power Parity at the Commencement of the Euro (2003)
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Persistent link: https://EconPapers.repec.org/RePEc:cin:ucecwp:2003-08

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