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Purchasing power parity theory in three East Asian economies: New evidence

Ahmad, Mahyudin and Marwan, Nur Fakhzan (2012): Purchasing power parity theory in three East Asian economies: New evidence.

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Abstract

To an otherwise extensive literature with yet mixed findings on the long run Purchasing Power Parity (PPP) theory, this paper extends the evidence against the PPP hypothesis in three East Asian economies namely Indonesia, Malaysia, and Thailand based on quarterly data spanning forty years (1968:Q1-2008:Q1). The testing of PPP hypothesis in this study employs two methods namely Engle-Granger procedure and Johansen multivariate cointegration method.

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