We find an example where real exchange rate (RER) is stationary and the nominal exchange rate and the price levels are cointegrated but purchasing power parity (PPP) does not hold, which reveals a fault of the unit root and cointegration tests in this use. We argue that the distribution of an...

In this paper, the behavioral equilibrium exchange rate (BEER) model used in a time-series setting is investigated, via its application to the valuation of Chinese renminbi. A classical definition with its generalization is given. The different misalignment results derived from the BEER models...

A regular phenomenon of the behavioral equilibrium exchange rate (BEER) model is analyzed. The result derived by the model is proved to contradict the economic fact and that by the Balassa-Samuelson model. The BEER model cannot be used, therefore, to calculate equilibrium exchange rate.

The ratio, Penn effect and behavioral equilibrium exchange rate (BEER) are used to assess the level of the bilateral real exchange rate (RER) of the Chinese RMB against the US dollar in 1980–2012. The statistical indexes and economic meaning indicate that the findings from the BEER and ratio...

A simple currency valuation model is given. The model is based on the Penn effect but reduces the uncertainty of the econometric specification that the Penn effect and many other models have. We use the model to valuate eleven main currencies’ bilateral real exchange rate against the US dollar...

A regular phenomenon of the behavioral equilibrium exchange rate (BEER) model is analyzed. The result derived by the model is proved to contradict the economic fact and that by the Balassa-Samuelson model. The BEER model cannot be used, therefore, to calculate equilibrium exchange rate.

In popular studies, the theory of purchasing power parity (PPP) is tested for the real exchange rate (RER) that is constructed by price indexes and all variables are logarithmic. In this article, we test the absolute PPP theory for the RER that is constructed by general price levels and is in...

The ratio, Penn effect and behavioral equilibrium exchange rate (BEER) are used to assess the level of the bilateral real exchange rate of the Chinese RMB against the US dollar in 1980–2012. The statistical indexes and economic meaning indicate that the findings from the BEER and ratio models...

In explaining economic phenomena, economic analysis concentrates on selected influences and fixes the host of other factors under a ceteris paribus clause. This view, which goes back to Alfred Marshall (1842-1924), is developed in the first part of the book. Aggregation is viewed as a particular...

Life annuities provide a guaranteed income for the remainder of the recipient’s lifetime, and therefore, annuitization presents an important option when choosing an adequate investment strategy for the retirement ages. While there are numerous research articles studying annuities from a...