Does the Long-Run Ppp Hypothesis Hold for Africa? Evidence From Panel Co-Integration Study

Author/Editor:

Jun Nagayasu

Publication Date:

August 1, 1998

Electronic Access:

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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 addresses whether parallel market exchange rates in Africa behave in the long run in a manner consistent with the purchasing power parity (PPP) hypothesis. A recent econometric method, the panel co-integration test, enables us to examine the long-run PPP hypothesis by pooling the time-series data of several countries. This approach is particularly useful when analyzing African countries, which often do not have long time series. Using pooled data for 16 African countries, the study concludes that the behavior of parallel market exchange rates in Africa is consistent with the long-run PPP hypothesis.

Series:

Working Paper No. 1998/123

Subject:

Exchange rate arrangements Exchange rate flexibility Exchange rates Expenditure Foreign exchange Public investment and public-private partnerships (PPP) Purchasing power parity

English

Publication Date:

August 1, 1998

ISBN/ISSN:

9781451854589/1018-5941

Stock No:

WPIEA1231998

Pages:

22

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