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Asymmetry in the Purchasing Power Parity in the Context of South Africa

Author

Listed:
  • Reuben Jerome KISTEN

    (University of KwaZulu Natal, South Africa)

  • Simiso MSOMI

    (University of KwaZulu Natal, South Africa)

  • Paul-Francois MUZINDUTSI

    (University of KwaZulu Natal, South Africa)

  • Ntokozo NZIMANDE

    (University of Johannesburg, South Africa)

  • Malibongwe Cyprian NYATI

    (Tshwane University of Technology, South Africa)

Abstract

This paper investigated whether the purchasing power parity (PPP) hypothesis holds between South Africa and the United States of America and to determine if there is an asymmetry in the PPP from 1980 to 2020. A decomposition technique was applied to create key variables in which unit root tests such as ADF, PP, and the KPSS were employed. The results of all three tests found that the macro variables exhibited stationary behaviour, thus validating the PPP. Furthermore, by decomposing the variable into positive and negative components, the study reveals that the convergence to equilibrium is asymmetric. By showing this, we also confirmed the existence of asymmetry within the macro variables, which provides important implications for policymakers.

Suggested Citation

  • Reuben Jerome KISTEN & Simiso MSOMI & Paul-Francois MUZINDUTSI & Ntokozo NZIMANDE & Malibongwe Cyprian NYATI, 2025. "Asymmetry in the Purchasing Power Parity in the Context of South Africa," Management and Economics Review, Faculty of Management, Academy of Economic Studies, Bucharest, Romania, vol. 10(1), pages 103-118, February.
    • Handle: RePEc:rom:merase:v:10:y:2025:i:1:p:103-118
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    More about this item

    Keywords

    asymmetry; exchange rate; purchasing power parity.;
    All these keywords.

    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy

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