Detecting intra-national PPP model in China: A median-unbiased estimation approach |
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Authors: | Kai-Yin Woo Shu-Kam Lee |
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Institution: | aDepartment of Economics and Finance, Hong Kong Shue Yan University, Braemar Hill, North Point, Hong Kong |
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Abstract: | This paper studies the speed of price adjustments toward the intra-national PPP level within China based on half-life measurement. We calculate the point estimates of half-lives and the corresponding confidence intervals using median-unbiased estimation methods to correct for downward bias in least squares estimates. The point estimates of half-lives indicate that the speed of mean reversion toward convergence between region pairs is fast. A strong conclusion about the high speed of adjustments is, however, unwarranted in some regions where the confidence intervals for half-life estimates are much wider than others. |
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Keywords: | Intra-national PPP model Half-lives Median-unbiased estimation method |
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