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Analysis of Purchasing power parity with data for Macedonia

Josheski, Dushko and Koteski, Cane (2011): Analysis of Purchasing power parity with data for Macedonia.

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Abstract

This paper examines PPP parity theory with data for Macedonia. We test the empirical consensus in this literature that real exchange rates tend towards PPP in the very long run, also we use co-integration Engle-Granger method and error correction mechanism. The hypothesis we test that PPP theory holds in long run in the case of Macedonia, and this hypothesis is proven to be true.

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