Doctrine of relative purchasing power parity under fixed and flexible exchange rates reconsidered |
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| Authors: | Elsworth D Beach Nancy H Cottrell-Kruse Noel D Uri |
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| Institution: | 1. U.S. Department of Agriculture , Washington, DC;2. Professor at the University of Missouri. ,;3. U.S. Department of Agriculture , The views expressed are those of the authors and do not necessarily represent the policies of the organizations with which they are affiliated. Senior authorship is not assigned., Washington, DC |
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| Abstract: | The doctrine of relative purchasing power parity during periods of fixed and flexible exchange rates is investigated. Using cointegration techniques and data for the Group of Seven countries, a subset of the results suggests, that purchasing power parity held only between the United States and the United Kingdom over the period 1957 QI to 1973 QII. Different results are obtained for the 1973 QIII to 1990 QIV period. Based on the maximum likelihood approach of Johansen and Juselius and an error correction model, it is concluded that purchasing power parity held between the United States and Canada, the United States and France, the United States and Italy, and the United States and the United Kingdom. |
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