Purchasing Power Parity Holds Strong in Developing Countries, Boosting Economic Stability
The article looks at whether prices in developing countries match up with exchange rates over a long period. They studied data from 14 countries between 1973 and 2002. The researchers found that prices and exchange rates in these countries change a lot over time. They used different methods to test if prices and exchange rates are connected. The results show that in recent years, the idea that prices and exchange rates are linked is mostly true in developing countries.