This study tests the relative version of purchasing power parity (PPP) for a set of ten Asian developing countries using a panel cointegration framework. A 'between-dimension' dynamic OLS estimator as proposed by Pedroni is employed. The test results overwhelmingly reject the PPP hypothesis.

Using data from 87 countries, we show that proximity of recipient countries to the economic centres of the world, a diversified source of international tourist supplies, and larger share of GDP as tourism revenues are conducive to lower volatility in tourism receipts. We also find that the...