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Purchasing power parity in Mexico since 1933

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  • Frederick H. Wallace

    (Gulf University for Science and Technology)

Abstract

A new approach to cointegration developed by Enders et al. (Cointegration tests using instrumental variables with an example of the U.K. demand for money. Unpublished working paper. http://wenders.people.ua.edu/time-series-methods.html , 2008) is applied to long-span, high-frequency data to test for purchasing power parity in the Mexico–US real exchange rate. Overall the empirical results suggest that purchasing power parity (PPP) holds for the study period. The evidence for PPP is stronger when structural breaks are allowed in the real exchange rate.

Suggested Citation

  • Frederick H. Wallace, 2017. "Purchasing power parity in Mexico since 1933," Latin American Economic Review, Springer;Centro de Investigaciòn y Docencia Económica (CIDE), vol. 26(1), pages 1-18, December.
    • Handle: RePEc:spr:laecrv:v:26:y:2017:i:1:d:10.1007_s40503-017-0042-9
    DOI: 10.1007/s40503-017-0042-9
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Purchasing power parity; Real exchange rate; Cointegration;
    All these keywords.

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • F30 - International Economics - - International Finance - - - General

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