Testing the validity of PPP theory for African countries
Applied Economics Letters, cilt.25, ss.1273-1277, 2018 (SSCI, Scopus)
- Yayın Türü: Makale / Tam Makale
- Cilt numarası: 25
- Basım Tarihi: 2018
- Doi Numarası: 10.1080/13504851.2017.1418066
- Dergi Adı: Applied Economics Letters
- Derginin Tarandığı İndeksler: Social Sciences Citation Index (SSCI), Scopus
- Sayfa Sayıları: ss.1273-1277
- Ankara Yıldırım Beyazıt Üniversitesi Adresli: Evet
Özet
This study examines the purchasing power parity theory for 14 African countries by applying a recent composite time series method that incorporates the Fourier approximation. The structural breaks are modelled as a gradual smooth process by means of a Fourier component. The Fourier unit root test failed to find any evidence showing that real exchange rates for these 14 countries have mean-reverting tendencies. However, both cointegration and Fourier cointegration tests detect a stable long-term relation between the nominal exchange rate and relative price levels for 8 out of 14 countries; moreover, for five countries Fourier component in cointegration analysis is found to suit quite well.