Imbs, Jean M.; Rey, Helene; Mumtaz, Haroon; Ravn, Morton O. - National Bureau of Economic Research (NBER) - 2002
We show the importance of a dynamic aggregation bias in accounting for the PPP puzzle. We prove that established time series and panel methods substantially exaggerate the persistence of real exchange rates because of heterogeneity in the dynamics of disaggregated relative prices. When...
