This paper re-assesses the panel (unit root test) evidence for PPP on four monthly data sets. We discuss and illustrate … that commonly-used first generation panel unit root tests are inappropriate for PPP analysis since they are constructed for …-sectional dependence should be applied. Using inappropriate first generation tests, quite strong evidence for PPP is found. However, this …

integration lowers national price levels. Thus, the paper proposes a novel argument to rationalize systematic deviations from PPP …

exchange rates from levels implied by Purchasing Power Parity (PPP) are very persistent. Empirical efforts to explain this … differentials that drive equilibrium exchange rates away from levels implied by PPP, or the presence of non-linearities in the … adjustment process around PPP. By contrast, we combine these two explanations in the context of an innovative panel estimation …

Purchasing power parity (PPP) is one of the most important, but empirically controversial theories in international … macroeconomics. Although many researchers believe that some variant of PPP holds in the long run, there are diverse empirical results … regarding the PPP hypothesis. We examine the PPP hypothesis from an alternate point of view: We investigate the possibility of …

trade towards PPP during a catch-up process, which suggests very long half-life times of terms of trade. Two theoretical …

Recent advances in testing for the validity of Purchasing Power Parity (PPP) focus on the time series properties of … to which cross-section units are stationary. As a consequence, a reservation for PPP analyses based on such tests is that … a small number of real exchange rates in a given panel may drive the results. In this paper we examine the PPP …