Is purchasing power parity hypothesis valid in Ghana? An empirical assessment

Asuamah Yeboah, Samuel (2017): Is purchasing power parity hypothesis valid in Ghana? An empirical assessment.

Abstract

The paper examines the theory of Purchasing Power Parity (PPP) hypothesis to determine whether the hypothesis is valid for Ghana for the period 1960 to 2013, by employing the Augmented Dickey-Fuller (ADF) test and the Kwiatkwski, Phillips, Schmidt and shin (KPSS) test on a single time series data to test the unit root properties of real exchange rate (Official exchange rate). It is found that real exchange rate have unit root or are non-stationary in levels. The findings suggest that the purchasing power parity hypothesis is not valid for the period under discussion.

• Item Type: MPRA Paper
• Language: English
• Keywords: Purchasing Power Parity Hypothesis; Real Exchange Rate, Unit Root
• Subjects: D - Microeconomics > D5 - General Equilibrium and Disequilibrium > D51 - Exchange and Production Economies; F - International Economics > F3 - International Finance > F31 - Foreign Exchange; O - Economic Development, Innovation, Technological Change, and Growth > O2 - Development Planning and Policy > O24 - Trade Policy ; Factor Movement Policy ; Foreign Exchange Policy

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