Economics, Econometrics and Finance
4 years ago

Purchasing Power Parity Fails in Developing Countries, Impacting Economic Stability

Applied econometrics and international development
Purchasing Power Parity Based on Capital Account, Exchange Rate Volatility and Cointegration: Evidence from Some Developing Countries
Mudabber Ahmed

Paper Summary

The study looked at Purchasing Power Parity (PPP) in developing countries. They tested PPP using different methods but found that it doesn't hold true in most cases. Even when considering the capital account, PPP wasn't supported. Only in Pakistan, PPP as a theory of price determination showed some empirical support.

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