Browsing by Subject "Purchasing Power Parity"

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Open Access
Econometric testing of purchasing power parity in less developed countries : fixed and flexible exchange rate regime experiences
(2001) Sülkü, Seher Nur
he aim of this thesis is to investigate the purchasing power parity (PPP) hypothesis for sixteen developing countries during their fixed and flexible exchange rate experiences over the period 1957:01–1999:12. The main contribution of this thesis to the empirical literature on PPP is that our study is the first one considering PPP hypothesis on alternative exchange rate regimes for LDCs from all over the world. The bilateral exchange rates of 16 less developed countries (LDC) and the US, and their respective price levels are considered. Consumer Price Index (CPI) is used as to represent the price level. Three different methodologies have been employed to test PPP hypothesis. These are unit root tests (Dickey and Fuller (1979), DF; Augmented Dickey Fuller (1981), ADF; Phillips and Perron (1988), PP), Engle-Granger (1987) cointegration technique and Johansen multivariate VAR methodology (1988). As a consequently, we can not conclude from our study that PPP hypothesis work well under fixed or flexible regime periods, because we could find just a little and nearly equal number of evidences under these alternative regimes.
Open Access
Market power and purchasing power parity : a general equilibrium model
(2004) Vural, Hakan
In this thesis, the effect of market power on exchange rate is analyzed in a general equilibrium Lucas’s tree type model. The basic hypothesis that explains the level of the exchange rate is the Purchasing Power Parity (PPP), which predicts that money has the same purchasing power in each country. Research on exchange rates and goods prices has moved to an examination of the importance of imperfect competition in international markets. In the field of international economics, models of imperfect competition have been proposed to explain the response of import and import-competing prices to exchange rate changes. In this study imperfectly competitive relation between foreign and domestic firms is investigated under market power. Our theoretical analysis defines and measures the effects of market power on export and import prices and their relative amounts. Our results indicate that market power affects the composition of a country’s consumption in terms of import and domestically produced goods because of the effect on the prices at home and abroad.
Open Access
Purchasing power parity: An Application for Turkey (1980-1987)
(1989) Bilge, Cem
Purchasing Power Parity (PPP) is claimed to be the oldest and simplest theory in determining the exchange rates of currencies. With its three versions, absolute PPP, relative PPP, and efficient markets PPP, this theory argues that price index levels of the countries are considered while setting the exchange rates. In this study, a general review of the theorj' and its failures are initially summarized. As the main purpose of the paper, the relative PPP has been applied for Turkey between 1980 and 1987 by taking USA as the comparision country. The application has been concentrated on both the official and black-market exchange rate determinations.