Purchasing Power Parity in Asian developing Countries: A Co-Integration Test
Tang, Min; Butiong, Ronald Q. | April 1994
Abstract
In this study, we used co-integrating techniques to examine the long-term relationships among the exchange, and inflation rates on the major Asian Developing Countries. The short-term impact of these variables is also estimated by an error-correction model. Our result shows that there is a strong evidence that PPP holds as a long-run coastraint in countries at a lower stage of economic developments and characterized by underdeveloped capital market. For countries that have substantial foreign exchange speculations and capital movements, the changes of exchange rate deviate largely from PPP. The paper also showed that there is lack of evidence to support the conventional wisdom which predicts that a large share of nontradable sector, severe trade restrictions and intensified government intervention in foreign exchange markets would lead to a divergence between the exchange rate and PPP.
Citation
Tang, Min; Butiong, Ronald Q.. 1994. Purchasing Power Parity in Asian developing Countries: A Co-Integration Test. © Asian Development Bank. http://hdl.handle.net/11540/3047. License: CC BY 3.0 IGO.Keywords
Asian Development Bank
Development
Trade
Development Goals
Skills Development
Sustainable Development
Trade Flows
Trade And Development
Food Security And Trade
Trade Volume
Trade Potential
Trade Flows
External Trade
Industrial policy
New technology
Innovations
Industry
Export policy
Import policy
Development assistance
ADB
Curriculum development
Development assistance
Development aid
Development indicators
Development potential
Development models
Project appraisal
Performance appraisal
Regional development bank
Trade development
Import volume
Export volume
Capital
Business
Communication in rural development
Social participation
Occupational training
Partnership
Joint venture
System analysis
Labor and globalization
Labor policy
Regional trading blocs
Foreign trade and employment
Developing countries
Industrial priorities
Technological innovation
Technology transfer
Foreign trade regulation
Industrial relations
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