The introduction of the euro is a momentous event that has important implications for the world, for Europe, and also for the world. Protectionism in Europe in its various forms is being given a final blow with the introduction of the common currency that, for the first time, will lead to...

We formulate and implement a new empirical procedure to examine the validity of PPP in the long-run for 153 countries by using the familiar cross-country data set of Heston, Summers, and Aten (2002). Unlike the existing studies that rely on mean reversion of real exchange rates, we explicitly...