Testing the PPP Hypothesis in the Sub-Saharan Countries

Luis Gil-Alana and Guiglielmo Maria Caporale

No 10/2012, NCID Working Papers from Navarra Center for International Development, University of Navarra

Abstract: This paper examines the PPP hypothesis in a number of Sub-Saharan countries by testing the order of integration in the log of their real exchange rate vis-à-vis the US dollar. I(d) techniques based on both asymptotic and finite sample results are used. The test results lead to the rejection of PPP in all cases: although orders of integration below 1 are found in fourteen countries, the unit root null cannot be rejected.

Keywords: Purchasing Power Parity (PPP) (search for similar items in EconPapers)
JEL-codes: C22 F31 (search for similar items in EconPapers)
Pages: 16 pages
Date: 2012-12
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Persistent link: https://EconPapers.repec.org/RePEc:nva:unnvaa:wp10-2012

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