Lothian, James R. (contributor); Taylor, Mark P. (contributor) - 2006
)andLothianandTaylor(1997)showedthatthismayhavebeenthe
result of the low power of univariate unit root tests. This led to a search for …,andatestoftheexclusion
restrictions on the power and cross-product terms in this estimated equation
is then a test for linearity against a linear …)
Ifthecompositionofconsumptionintermsoftradableandnontradablegoods
issimilarinbothcountries(i.e. γ iscloseto γ
∗
),then(10)impliesthat Q will
diverge from unity (the purchasing power …