A Test of Purchasing Power Parity Efficiency in Vietnam and Other Southeastern Asian Countries

2017 ◽  
Author(s):  
Thuy Tien Ho ◽  
Pham Thu Hong ◽  
Hoai Thu Ho
Keyword(s):  
Purchasing Power Parity ◽  
Purchasing Power ◽  
Asian Countries ◽  
Power Parity

scholarly journals Investigating the ppp theory and long-run estimates for five Asian countries

2018 ◽  
Vol 7 (4.28) ◽  
pp. 26
Author(s):  
Niri Martha Choji ◽  
Siok Kun Sek
Keyword(s):  
Least Squares ◽  
Purchasing Power Parity ◽  
Unit Root ◽  
Ordinary Least Squares ◽  
Nominal Exchange Rate ◽  
Purchasing Power ◽  
Asian Countries ◽  
Power Parity ◽  
Panel Unit Root ◽  
Long Run

The theory of purchasing power parity (PPP) theory posits that the conversion rate between two currencies ought to be the same as the ratio of the total price levels between two currencies. Using monthly recent panel data for five Asian countries, from the period 1996M01-2016M08, the paper examined the PPP theory by utilizing robust methods of panel unit root and cointegration (Pesaran and Westerlund) tests that put into consideration cross-sectional dependence. The panel unit root test results show that all the variables considered are not stationary at levels but stationary at first difference (all variables are I(1)), because of that, the cointegration test was carried out. Results showed the presence of long-run relationship among the variables implying that the purchasing power parity theory exists in the long-run. Furthermore, the long-run relationships were estimated using the dynamic ordinary least squares (DOLS), fully modified ordinary least squares (FMOLS) and the mean group (MG) estimators. Surprisingly, all these estimators gave similar results, they showed that the domestic prices cause depreciation while the foreign prices cause appreciation of the nominal exchange rates in the five Asian countries. Generally, the effect of nominal exchange rate appreciation is more than depreciation in the five Asian countries.

scholarly journals Purchasing Power Parity and Productivity-Bias Hypothesis

2015 ◽  
Vol 8 (2) ◽  
pp. 9-38
Author(s):  
Tri Widodo
Keyword(s):  
Purchasing Power Parity ◽  
Significant Contribution ◽  
East Asian ◽  
The Philippines ◽  
Purchasing Power ◽  
Asian Countries ◽  
Power Parity ◽  
Republic Of China ◽  
Traded Goods ◽  
Univariate Time Series

AbstractThis paper examines the purchasing power parity (PPP) theorem adjusted the “productivity-bias hypothesis” or the Balassa-Samuelson effect (Balassa, 1964; Samuelson, 1964) for eight East Asian countries including Japan, New Industrializing Economies (NIE-3: Singapore; Hong Kong, China; and Korea), the ASEAN-3 (Malaysia, Indonesia and the Philippines) and the People’s Republic of China (PRC). This paper applies three methods of analysis i.e. univariate time series, multivariate regression and Johansen multivariate cointegration. The three methods give the same conclusions. First, the PPP hypothesis does not hold in the case of the eight East Asian countries. Second, non-traded goods give significant contribution on the PPP deviation. It is confirmed by the existence of Balassa-Samuelson effect.

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