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Testing the PPP Hypothesis in the Sub-Saharan Countries

Author

Listed:
  • Luis Alberiko Gil-Alaña

    (Navarra Center for International Development)

  • Guiglielmo Maria Caporale
Abstract
This paper examines the PPP hypothesis in a number of Sub-Saharan countries by testing the order of integration in the log of their real exchange rate vis-à-vis the US dollar. I(d) techniques based on both asymptotic and finite sample results are used. The test results lead to the rejection of PPP in all cases: although orders of integration below 1 are found in fourteen countries, the unit root null cannot be rejected.

Suggested Citation

  • Luis Alberiko Gil-Alaña & Guiglielmo Maria Caporale, 2012. "Testing the PPP Hypothesis in the Sub-Saharan Countries," NCID Working Papers 10/2012, Navarra Center for International Development, University of Navarra.
    • Handle: RePEc:nva:unnvaa:wp10-2012
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Purchasing Power Parity (PPP);

    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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