Summary
In this paper the absolute and relative versions of purchasing power parity (ppp) are tested using annual data (over the period 1973–1985) for 5 countries. In contrast to much of the literature on ppp, evidence in favour of the ppp hypothesis is reported, particularly when a wholesale price index is used. A novel feature of the approach is the use of a pooled cross section-time series analysis.
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I am indebted to Hector Williams for efficient research assistance.
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Macdonald, R. Purchsing power parity: Some ‘long run’ evidence from the recent float. De Economist 136, 239–252 (1988). https://doi.org/10.1007/BF01238623
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DOI: https://doi.org/10.1007/BF01238623