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PPP in the 34 OECD countries: evidence from quantile-based unit root tests with both smooth and sharp breaks

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  • Mohsen Bahmani-Oskooee
  • Tsung-Pao Wu

Abstract

Conventional unit root tests have mostly failed to validate the PPP. Quantile-based unit root tests by previous research have provided some support for the PPP. In this article, we take an additional step and incorporate sharp shifts and smooth breaks into the quantile-based unit root test and re-examine the PPP in each of the 34 OECD countries over the period 1994:01–2016:03. We find support for the PPP in 18 countries of Austria, Chile, Estonia, Finland, France, Germany, Italy, Korea, Mexico, Netherlands, New Zealand, Poland, Portugal, Slovenia, Sweden, Switzerland, Turkey and the United Kingdom.

Suggested Citation

  • Mohsen Bahmani-Oskooee & Tsung-Pao Wu, 2018. "PPP in the 34 OECD countries: evidence from quantile-based unit root tests with both smooth and sharp breaks," Applied Economics, Taylor & Francis Journals, vol. 50(23), pages 2622-2634, May.
    • Handle: RePEc:taf:applec:v:50:y:2018:i:23:p:2622-2634
    DOI: 10.1080/00036846.2017.1403562
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    Cited by:

    1. Kenneth W. Clements & Jiawei Si & Hai Long Vo, 2023. "The Law of One Food Price," Open Economies Review, Springer, vol. 34(1), pages 195-216, February.
    2. David De Villiers & Andrew Phiri, 2022. "Towards resolving the purchasing power parity (PPP) ‘Puzzle’ in newly industrialized countries (NIC’s)," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 31(2), pages 161-180, February.
    3. Thomas L Bradley & Paul B Eberle, 2023. "Purchasing Power Parity In Russia And The Transitioning Economy 1990-1995," Review of Economic and Business Studies, Alexandru Ioan Cuza University, Faculty of Economics and Business Administration, issue 31, pages 85-111, June.
    4. Hai Long Vo & Duc Hong Vo, 2023. "The purchasing power parity and exchange‐rate economics half a century on," Journal of Economic Surveys, Wiley Blackwell, vol. 37(2), pages 446-479, April.

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