Purchasing power parity for East-Asia countries: further evidence based on panel stationary test with multiple structural breaks

In this article, we re-investigate the validity of Purchasing Power Parity (PPP) for a sample of 10 East-Asia countries over the period of January 1987 to June 2005, using a recently developed econometric technique of the panel stationary test with multiple structural breaks, proposed by Carrion-i-Silvestre et al. (2005 Carrion-i-Silvestre, JL, Del Barrio, T and López-Bazo, E. 2005. Breaking the panels: an application to the GDP per capita. Econometrics Journal, 8: 159–75. Crossref], Web of Science ®] , Google Scholar]). This test considers multiple structural breaks positioned at different unknown dates and a different number of breaks for each individual. Empirical evidence shows that the PPP holds true for half of 10 East-Asia countries during the research period. Our results have important policy implications for these 10 East-Asia countries under study.