PPP and the real exchange rate - data evidence

RESEARCH - Georgios Chortareas and Rebecca Driver of the Bank of England have published a working paper titled "PPP and the real exchange rate - real interest rate differential puzzle revisited: evidence from non-stationary panel data

Abstract

This paper examines the evidence for two of the relationships that underpin (explicitly or implicitly) much of international macroeconomics. The first is purchasing power parity (PPP), or the hypothesis that there exists a constant long-run equilibrium real

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