A managerial model of investment: overlooked alternatives |
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Authors: | Julian Gough Stephen Hill |
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Institution: | Department of Applied Economics , Uwist , Cardiff , U.K |
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Abstract: | The long-run purchasing power parity (PPP) hypothesis is tested for nine bilateral sterling exchange rates, using recently developed techniques on cointegration and seasonal integration. The empirical findings show that none of the exchange rates and relative prices contain seasonal unit roots, but all have an autoregressive unit root. The cointegration tests overwhelmingly reject the PPP hypothesis as a long-run equilibrium condition for all countries concerned. |
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