Economics, Econometrics and Finance
5 years ago

Purchasing Power Parity Theory Challenged in ASEAN-Five Economies

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International Journal of Business and Society
The Validity of Purchasing Power Parity (PPP) Theory in Asean-Five Economies: The Bounds Test Approach
Chee‐Keong Choong, Wai Ching Poon, Muzafar Shah Habibullah, Zulkornain Yusop

Paper Summary

The article examines different Purchasing Power Parity models for ASEAN-Five economies from 1983 to 2002. They used various econometric techniques and found that the relative PPP model holds true in these countries. This means that prices in different countries should be similar when expressed in the same currency. The study supports the theory of PPP in ASEAN-Five economies.

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