Economics, Econometrics and Finance
4 years ago

Purchasing Power Parity Holds Strong in Diverse Market Economies Worldwide

Borsa Istanbul Review
Testing the validity of purchasing power parity in alternative markets: Evidence from the fourier quantile unit root test
Murat Doğanlar, Faruk Mike, Oktay Kızılkaya

Paper Summary

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The study looked at whether purchasing power parity (PPP) holds true in different types of markets by analyzing data from 45 countries over a 25-year period. They used a special test called the Fourier quantile unit root test to do this. The results showed that PPP is valid in 8 developed, 11 emerging, and 7 frontier market economies.