Does the Long-Run Ppp Hypothesis Hold for Africa? Evidence From Panel Co-Integration Study

Download or read book Does the Long-Run Ppp Hypothesis Hold for Africa? Evidence From Panel Co-Integration Study written by Mr.Jun Nagayasu and published by International Monetary Fund. This book was released on 1998-08-01 with total page 23 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper addresses whether parallel market exchange rates in Africa behave in the long run in a manner consistent with the purchasing power parity (PPP) hypothesis. A recent econometric method, the panel co-integration test, enables us to examine the long-run PPP hypothesis by pooling the time-series data of several countries. This approach is particularly useful when analyzing African countries, which often do not have long time series. Using pooled data for 16 African countries, the study concludes that the behavior of parallel market exchange rates in Africa is consistent with the long-run PPP hypothesis.