Logo
Munich Personal RePEc Archive

The PPP Puzzle: An Update

Razzak, Weshah (2017): The PPP Puzzle: An Update.

[thumbnail of MPRA_paper_80774.pdf]
Preview
PDF
MPRA_paper_80774.pdf

Download (780kB) | Preview

Abstract

We show that the Purchasing Power Parity (PPP) puzzle, whereby the half-life of the shock to the real exchange rate is long and unjustifiable by monetary and financial shocks, is a result of specification and estimation issues. We provide an alternative specification for PPP and show that the half-life of the shock could be as short as 6.8 months and as long as 2 years, which is considerably shorter than what have been reported in the literature.

Atom RSS 1.0 RSS 2.0

Contact us: mpra@ub.uni-muenchen.de

This repository has been built using EPrints software.

MPRA is a RePEc service hosted by Logo of the University Library LMU Munich.