Long-run purchasing power parity (LRPPP), the basis of most open economy macroeconomic models, has proved difficult to back up empirically. However, there is one standout exception to the otherwise mixed results. are consistently cited as having found strong evidence of LRPPP by using a...

This paper examines whether inclusion of structural breaks helps resolve the puzzling result of excessively slow speed of convergence in relative prices across US cities while using long time series data on CPI. With an endogenously determined single break in 1985 in annual CPI data for 17 major...

This paper examines the dynamic behavior of bilateral real exchange rates between India and 16 of its trading partner countries using annual data from 1960 to 2010. We use panel unit root test procedures, with and without structural breaks, to investigate if there is any evidence in India’s...

We investigate two alternative versions of Purchasing Power Parity (PPP): reversion to a constant mean in the spirit of Cassel and reversion to a constant trend in the spirit of Balassa and Samuelson, using long-span real exchange rate data for industrialized countries. We develop unit root...

An extensive literature that studied the performance of empirical exchange rate models following Meese and Rogoff's [Meese, R.A., Rogoff, K., 1983a. Empirical Exchange Rate Models of the Seventies: Do They Fit Out of Sample? Journal of International Economics 14, 3-24.] seminal paper has not...