Chen, Chien-Fu; Shen, Chung-Hua; Wang, Chien-An - In: Economics Bulletin 6 (2007) 8, pp. 1-19
This paper examines the validity of purchasing power parity (PPP) using CPI and Big Mac prices. The benchmark model, i.e., the OLS method, which does not take nonstationarity into account, rejects the hypothesis of PPP regardless of prices used. We next use the panel cointegration method to...