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The Purchasing Power Parity puzzle: a sudden nonlinear perspective

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  • Marcus Lahtinen

Abstract

The aim of this study is to construct a simple nonlinear model for the US dollar-euro real exchange rate. The nonlinear model considered allows the adjustment towards long-run equilibrium to be sudden as well as smooth. It was found that the adjustment is sudden.

Suggested Citation

  • Marcus Lahtinen, 2006. "The Purchasing Power Parity puzzle: a sudden nonlinear perspective," Applied Financial Economics, Taylor & Francis Journals, vol. 16(1-2), pages 119-125.
    • Handle: RePEc:taf:apfiec:v:16:y:2006:i:1-2:p:119-125
    DOI: 10.1080/09603100500390000
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    References listed on IDEAS

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