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Purchasing power parity for East-Asia countries: further evidence based on panel stationary test with multiple structural breaks

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  • Tsangyao Chang
  • Ding Li
  • Yang-Cheng Lu
  • Chia-Hao Lee

Abstract

In this article, we re-investigate the validity of Purchasing Power Parity (PPP) for a sample of 10 East-Asia countries over the period of January 1987 to June 2005, using a recently developed econometric technique of the panel stationary test with multiple structural breaks, proposed by Carrion-i-Silvestre et al. (2005). This test considers multiple structural breaks positioned at different unknown dates and a different number of breaks for each individual. Empirical evidence shows that the PPP holds true for half of 10 East-Asia countries during the research period. Our results have important policy implications for these 10 East-Asia countries under study.

Suggested Citation

  • Tsangyao Chang & Ding Li & Yang-Cheng Lu & Chia-Hao Lee, 2011. "Purchasing power parity for East-Asia countries: further evidence based on panel stationary test with multiple structural breaks," Applied Economics, Taylor & Francis Journals, vol. 43(24), pages 3289-3298.
    • Handle: RePEc:taf:applec:v:43:y:2011:i:24:p:3289-3298
    DOI: 10.1080/00036840903508403
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