Philip, Kostov (2006): Can the Law of One Price be tested?
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A simple stylised model, that incorporates transaction costs, is developed. The Law of One Price (LOP) is assumed to hold with regard to a reference market that is not taken into account in the empirical testing of the Law. It is shown that under these assumptions the empirical tests of the LOP will fail.
|Item Type:||MPRA Paper|
|Original Title:||Can the Law of One Price be tested?|
|Keywords:||Law of one price; purchasing power parity; transaction costs|
|Subjects:||F - International Economics > F1 - Trade > F14 - Empirical Studies of Trade
F - International Economics > F0 - General
|Depositing User:||Philip Kostov|
|Date Deposited:||31. Oct 2006|
|Last Modified:||18. Feb 2013 23:16|
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