IDEAS home Printed from https://ideas.repec.org/a/ibn/masjnl/v11y2016i1p188.html
   My bibliography  Save this article

The Validity of the Purchasing Power Parity Hypothesis for Kuwait

Author

Listed:
  • Ebrahim Merza

Abstract

Many studies have tested the null hypothesis of the unit root of the real exchange rate to examine the validity of the purchasing power parity (PPP) hypothesis. Previous studies have reached different conclusions regarding that issue. This study tests the hypothesis of PPP in Kuwait using two tests of unit roots, the Augmented Dickey Fuller (ADF) and Phillips Perron (PP) tests. Using monthly data from 2006 to 2015, both tests reject the PPP hypothesis for the Kuwaiti economy. Using the components of the real exchange rate, we find that the levels of prices in both Kuwait and the US are not moving together to provide stationarity for the real exchange rate. This result could be attributed to the large increases in the prices of the housing and food and beverages sectors in Kuwait during that time.

Suggested Citation

  • Ebrahim Merza, 2017. "The Validity of the Purchasing Power Parity Hypothesis for Kuwait," Modern Applied Science, Canadian Center of Science and Education, vol. 11(1), pages 188-188, September.
    • Handle: RePEc:ibn:masjnl:v:11:y:2016:i:1:p:188
    as

    Download full text from publisher

    File URL: https://ccsenet.org/journal/index.php/mas/article/download/62156/34548
    Download Restriction: no
    File URL: https://ccsenet.org/journal/index.php/mas/article/view/62156
    Download Restriction: no
    ---><---

    More about this item

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ibn:masjnl:v:11:y:2016:i:1:p:188. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Canadian Center of Science and Education (email available below). General contact details of provider: https://edirc.repec.org/data/cepflch.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.