Long-Run Purchasing Power Parity and the Dollar-Sterling Exchange Rate in the 1920's

Author/Editor:

Mark P. Taylor

Publication Date:

December 1, 1990

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

This paper replies to Ahking’s (1990) re-examination of Taylor and McMahon’s (1988) analysis of long-run purchasing power parity in the 1920s. We demonstrate that Ahking’s conclusions are only partially correct and reestablish our conclusion that, a form of long-run purchasing-power parity did in fact hold for dollar-sterling during this period. The new results are also employed to gauge the degree of overvaluation of sterling relative to the imposed prewar parity of $4.86 upon its return to gold and for 12 months afterwards.

Series:

Working Paper No. 1990/118

Subject:

Econometric analysis Exchange rates Foreign exchange Prices Purchasing power parity Wholesale price indexes

English

Publication Date:

December 1, 1990

ISBN/ISSN:

9781451940565/1018-5941

Stock No:

WPIEA1181990

Pages:

25

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