This paper revisits the empirical evidence of purchasing power parity under the current float by the recursive mean adjustment (RMA) method (So and Shin, 1999). We first demonstrate superior finite sample performance of the RMA-based unit root test over the augmented Dickey-Fuller test via Monte...

Taylor (2002) claims that Purchasing Power Parity (PPP) has held over the 20th century based on strong evidence of stationarity for century-long real exchange rates for 20 countries. Lopez et al. (2005), however, found much weaker evidence of PPP with alternative lag selection methods. We...