A test of long-run purchasing power parity. (Q5958685)
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scientific article; zbMATH DE number 1715726
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| English | A test of long-run purchasing power parity. |
scientific article; zbMATH DE number 1715726 |
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A test of long-run purchasing power parity. (English)
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3 March 2002
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There is a continuing debate whether purchasing power parity holds as a long-run equilibrium relationship. This note applies an exact small-sample, pointwise most powerful invariant unit root test to annual, long-horizon real exchange rates. This test finds clear and consistent evidence in favor of the true purchasing power parity relationship.
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Purchasing power parity
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Real exchange rate
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Unit root
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Exact pointwise most powerful invariant test
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0.8318752646446228
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0.8284258842468262
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0.813214123249054
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0.8112481832504272
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0.8086198568344116
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