ARDL Approach to Test the Productivity Bias Hypothesis |
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Authors: | Mohsen Bahmani-Oskooee A B M Nasir |
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Institution: | Center for Research on International Economics, University of Wisconsin-Milwaukee, USA; North Carolina Central University, Durham, USA |
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Abstract: | The productivity bias hypothesis states that a relatively more productive country should experience a real appreciation of its currency. Most studies in the literature that have tested the hypothesis have employed cross‐sectional data. Only a few studies have used time‐series data and they have tested the hypothesis for only a small number of countries. In this paper the authors test the hypothesis by using time‐series data over the 1960–90 period for a sample of 44 countries and with a relatively new method of cointegration known as the ARDL approach. For most countries there is strong evidence supporting the hypothesis. |
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