Exchange rate uncertainty and deviations from purchasing power parity : evidence from the G7 area

Michael G. Arghyrou, Andros Gregoriou and Panayiotis M. Pourpourides

Arghyrou, Gregoriou and Pourpourides (2009) argue that exchange rate uncertainty causes deviations from the law of one price. We test this hypothesis on aggregate data from the G7-area. We find that exchange rate uncertainty explains to a significant degree deviations from Purchasing Power Parity. -- Purchasing power parity ; exchange rate uncertainty

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Year of publication:	2009
Authors:	Arghyrou, Michael Georgiou ; Gregoriou, Andros ; Pourpourides, Panayiotis M.
Publisher:	Cardiff : Cardiff Univ, Cardiff Business School, Economics Section
Subject:	Wechselkurspolitik \| Exchange rate policy \| Währungsrisiko \| Exchange rate risk \| Preiskonvergenz \| Price convergence \| Kaufkraftparität \| Purchasing power parity \| G7-Staaten \| G7 countries \| 1973-1998