Absolute purchasing power parity in industrial countries

Zhang, Zhibai and Bian, Zhicun (2015): Absolute purchasing power parity in industrial countries.

Abstract

Different from popular studies that focus on relative purchasing power parity, we study absolute purchasing power parity (APPP) in 21 main industrial countries. Three databases are used. Both the whole period and the sub-period are analyzed. The empirical proof shows that the phenomenon that APPP holds is common, and the phenomenon that APPP does not hold is also common. In addition, some country pairs and the pooled country data indicate that the nearer the GDPPs of two countries are, the more valid APPP between the two countries is.

• Item Type: MPRA Paper
• Language: English
• Keywords: Absolute purchasing power parity; Real exchange rate; Coefficient restriction test
• Subjects: F - International Economics > F3 - International Finance

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