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Purchasing power parity in three transition economies

Lookup NU author(s): Dr David Barlow

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Abstract

This paper uses cointegration analysis on monthly data over April 1994-December 2000 to test the relevance theory of Purchasing Power Parity (PPP) for two advanced transition economies (Poland and the Czech Republic) and one lagging transition economy (Romania). PPP is not rejected between the lagging reformer and developed market economies, but is rejected between the advanced reformers and the developed economies. However, PPP is not rejected between the two advanced transition economies, though it is rejected between the lagging and advanced transition economies. The evolution of the real exchange rates over 1994-2000 suggest that a significant explanation for these findings is the central role of the exchange rate in the disinflation strategies of Poland and the Czech Republic in the early part of this period, in contrast to the managed float followed by Romania throughout the period. © 2004 Kluwer Academic Publishers. Printed in Netherlands.

Publication metadata

Author(s): Barlow D

Publication type: Article

Publication status: Published

Journal: Economics of Planning

Year: 2003

Volume: 36

Issue: 3

Pages: 201-221

Print publication date: 01/01/2003

ISSN (print): 0013-0451

ISSN (electronic): 1574-0277

Publisher: Springer

URL: http://dx.doi.org/10.1023/B:ECOP.0000024027.98358.4f

DOI: 10.1023/B:ECOP.0000024027.98358.4f

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