THE VALIDITY OF THE PURCHASING POWER PARITY HYPOTHESIS IN OECD COUNTRIES: EVIDENCE FROM THE FOURIER TEST / OECD Ülkelerinde Satın Alma Gücü Paritesi Hipotezinin Geçerliliği: Fourier Testinden Kanıtlar
According to purchasing power parity (PPP), the nominal exchange rate between the two currencies should be equal to the ratio of the total price levels between the two countries. In other words, it is a simple theory that argues that countries' currencies will have the same purchasing value. In...
| Published in: | Uluslararası Ekonomi, İşletme ve Politika Dergisi |
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| Main Author: | |
| Format: | Article in Journal/Newspaper |
| Language: | English Turkish |
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Recep Tayyip Erdoğan Üniversitesi
2021
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| Subjects: | |
| Online Access: | https://doi.org/10.29216/ueip.988853 https://doaj.org/article/baa51764170c4adc8dfeba446734f178 |
| Summary: | According to purchasing power parity (PPP), the nominal exchange rate between the two currencies should be equal to the ratio of the total price levels between the two countries. In other words, it is a simple theory that argues that countries' currencies will have the same purchasing value. In this study, 25 OECD countries is aimed to test the validity of the purchasing power parity hypothesis. The validity of the hypothesis was tested with the monthly data of 1980-Q1 2018-Q12 and Fourier KPSS unit root tests. As a result of the analysis, the validity of the purchasing power parity hypothesis was provided in Brazil, France, Italy, Sweden, Iceland, Ireland, Spain; It has been determined that the purchasing power parity hypothesis is not valid in the countries of Australia, Austria, Belgium, Canada, Germany, Japan, Malaysia, Mexico, Switzerland, USA, Chile, Colombia, Finland, Luxembourg, Netherlands, New Zealand, Norway, Portugal. |
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