IDEAS home Printed from https://ideas.repec.org/a/mve/journl/v29y2003i2p1-20.html
   My bibliography  Save this article

Real Exchange Rate Variation and Failure of the Law of One Price: Does Geography Matter?

Author

Listed:
  • Sean Michael Snaith

    (University of North Dakota)

Abstract

Using monthly and quarterly data from a sample of up to 741 real exchange rate series, we examine several factors to explain the failure of the Law of One Price and Purchasing Power Parity. The factors are often excluded or assumed away in traditional analysis of these theorems. The main findings include a positive significant relationship between real exchange rate variability and distance between countries, real output growth rate differentials and nominal exchange rate variability. A significant negative relationship exists with membership in trade groups such as the EEC and EFTA, and in countries that are islands.

Suggested Citation

  • Sean Michael Snaith, 2003. "Real Exchange Rate Variation and Failure of the Law of One Price: Does Geography Matter?," Journal of Economic Insight, Missouri Valley Economic Association, vol. 29(2), pages 1-20.
    • Handle: RePEc:mve:journl:v:29:y:2003:i:2:p:1-20
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    More about this item

    JEL classification:

    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F10 - International Economics - - Trade - - - 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:mve:journl:v:29:y:2003:i:2:p:1-20. 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: Cullen Goenner (email available below). General contact details of provider: https://edirc.repec.org/data/mveaaea.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.