This paper shows that there are two regularities in foreign exchange markets in advanced countries with flexible regimes. First, real exchange rates are mean-reverting, as implied by the Purchasing Power Parity model. Second, the adjustment takes place via nominal exchange rates. These features...

This paper shows that there are two regularities in foreign exchange markets in advanced countries with flexible regimes. First, real exchange rates are mean-reverting, as implied by the Purchasing Power Parity model. Second, the adjustment takes place via nominal exchange rates. These features...

This report presents the summary results of purchasing power parities (PPP) in the 2011 International Comparison Program in Asia and the Pacific and background information on the concepts that underpin the results. The PPPs are disaggregated by major economic aggregates which enable robust...

From around 1897 until 1924 the Guatemalan peso was a fiat currency whose exchange value floated against the U.S. dollar. The behavior of the nominal exchange rate is consistent with purchasing power parity. The hypothesis that the elasticities of the exchange rate with respect to the domestic...

This paper explores the impact of the East Asian crisis of 1997/98 on foreign exchange markets and purchasing power parity within the region. While many studies have attempted to test for PPP prior to these events, there has been little opportunity to test for this long run phenomenon in the...

Recent evidence indicates that Australia's real effective exchange rate, its terms of trade and a long-term real interest rate differential form a cointegrating relationship. This paper uses this evidence to analyse the nominal US$/A$ exchange rate. The US$/A$ rate is found to be cointegrated...

This study has found an empirical support of Purchasing Power Parity (PPP) theory for an East Asia transition economy – Cambodia. It is based on the results of cointegration among KHR/USD, Cambodia CPI, and world CPI over the monthly period May 2001-February 2009. This finding is useful for...

This study contributes to the existing literature by examining the validity of PPP hypothesis for Cambodia. The standard unit root tests (ADF and PP) and the panel unit root tests fail to support PPP hypothesis for the nine Cambodia’s trading partners. The unit root tests with structural break...

Menu prices from 13 international restaurant franchises that operate in both El Paso, Texas and Ciudad Juarez, Mexico are utilized to examine the behavior over time of the peso/dollar exchange rate. Parametric and non-parametric tests indicate that the price ratio alone provides a biased...