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Is purchasing power parity hypothesis valid in Ghana? An empirical assessment

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  • Asuamah Yeboah, Samuel

Abstract

The paper examines the theory of Purchasing Power Parity (PPP) hypothesis to determine whether the hypothesis is valid for Ghana for the period 1960 to 2013, by employing the Augmented Dickey-Fuller (ADF) test and the Kwiatkwski, Phillips, Schmidt and shin (KPSS) test on a single time series data to test the unit root properties of real exchange rate (Official exchange rate). It is found that real exchange rate have unit root or are non-stationary in levels. The findings suggest that the purchasing power parity hypothesis is not valid for the period under discussion.

Suggested Citation

  • Asuamah Yeboah, Samuel, 2017. "Is purchasing power parity hypothesis valid in Ghana? An empirical assessment," MPRA Paper 99394, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:99394
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    References listed on IDEAS

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    14. Guglielmo Maria Caporale & Luis A. Gil-Alana, 2010. "Real Exchange Rates In Latin America: The Ppp Hypothesis And Fractional Integration," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 35(2), pages 1-21, June.
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    More about this item

    Keywords

    Purchasing Power Parity Hypothesis; Real Exchange Rate; Unit Root;
    All these keywords.

    JEL classification:

    • D51 - Microeconomics - - General Equilibrium and Disequilibrium - - - Exchange and Production Economies
    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • O24 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Trade Policy; Factor Movement; Foreign Exchange Policy

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