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Testing the purchasing power parity in China

Author

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  • Olivier Darné

    (EconomiX - EconomiX - UPN - Université Paris Nanterre - CNRS - Centre National de la Recherche Scientifique)

  • Jean-François Hoarau

Abstract

In this paper we examine whether purchasing power parity holds in the long run in China for the period 1970:1 to 2006:5 from an alternative method relative to the previous studies. We underlined the effects of large, but infrequent shocks due to changes of Chinese exchange policy (undertaken since the China's foreign exchange reform) on the real exchange rate, using outlier methodology. We also show that there is no endency to the purchasing power parity in China to hold in the long run during this period.

Suggested Citation

  • Olivier Darné & Jean-François Hoarau, 2006. "Testing the purchasing power parity in China," Working Papers hal-04138871, HAL.
    • Handle: RePEc:hal:wpaper:hal-04138871
    Note: View the original document on HAL open archive server: https://hal.science/hal-04138871
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    More about this item

    Keywords

    Purchasing power parity; real exchange rate; unit root tests; outliers; renminbi.;
    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
    • F31 - International Economics - - International Finance - - - Foreign Exchange

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