Purchasing Power Parity and the Balance of Payments: Some Empirical Evidence (Parite des pouvoirs d'achat et balance des paiements: Resultats empiriques) (Paridad del poder adquisitivo y balanza de pagos: Algunas pruebas empiricas)

1977 ◽  
Vol 24 (1) ◽  
pp. 77 ◽  
Author(s):  
Arturo Brillembourg
Keyword(s):  
Empirical Evidence ◽  
Purchasing Power Parity ◽  
Balance Of Payments ◽  
Purchasing Power ◽  
Power Parity

scholarly journals A Correct Test of Purchasing Power Parity: The Case of Pak-Rupee Exchange Rates

1996 ◽  
Vol 35 (4II) ◽  
pp. 671-682 ◽  
Author(s):  
Razzaque H. Bhatti
Keyword(s):  
Exchange Rate ◽  
Exchange Rates ◽  
Empirical Evidence ◽  
Purchasing Power Parity ◽  
Trade Balance ◽  
Purchasing Power ◽  
Power Parity ◽  
Long Run ◽  
Bayesian Test ◽  
Almost All

This paper presents some empirical evidence on long-run purchasing power parity (PPP) for eight Pak-rupee exchange rates over the period 1982:1–1994:4. Results obtained from testing for cointegration and coefficient restrictions using the Johansen (1988, 1991) procedure are supportive of PPP in almost all cases. These results are also supported by those obtained from testing for mean reversion in the real exchange rate using the Sims (1988) Bayesian test. One of the conclusions that emerge from these results is that devaluation of Pak-rupee vis-à-vis major industrial currencies under investigation may be unlikely to improve the country’s external competitiveness and, consequently, the deficit in its trade balance.

scholarly journals A Survey on Exchange Rates Determination in the Teachings of the Austrian School

2021 ◽  
pp. 105-144
Author(s):  
Massimiliano Neri
Keyword(s):  
Exchange Rate ◽  
Exchange Rates ◽  
Interest Rates ◽  
Purchasing Power Parity ◽  
Balance Of Payments ◽  
Purchasing Power ◽  
Power Parity ◽  
Austrian Theory ◽  
Palabras Clave ◽  
International Capital Movements

This survey represents a recollection of the contributions of prominent Austrian economists on the subject of the exchange rate determination (Mises, Hayek and Haberler). We review the theoretical fundaments that allow for a comprehensive understanding of the microeconomic forces that determine exchange rates. Then we examine the Purchasing Power Parity Theory, both from a neoclassical and Austrian viewpoint. Finally we inspect the international movements of money and the associations of these with the dynamics of the balance of payments and exchange rate. We leave open the door for future investigations over the idea of incorporating the notion of the Interest rates Parity, intended as a «tendency law», in the Austrian theory. Key words: Exchange rate, Austrian theory, purchasing power parity, balance of payments, international capital movements. Clasificación JEL: F31. Resumen: El presente ensayo representa una recopilación de las con-tribuciones de prominentes economistas austriacos sobre la de-terminación del tipo de cambio (Mises, Hayek, Haberler). En la pri-mera parte se repasan los fundamentos teoréticos que permiten una comprensión exhaustiva de las fuerzas microeconómicas que deter-minan el tipo de cambio. A continuación se examina la teoría de la paridad de poder adquisitivo, tanto desde un punto de vista austriaco como neoclásico. Finalmente se inspeccionan los movimientos inter-nacionales de dinero y las asociaciones de los mismos con las diná-micas de la balanza de pagos y del tipo de cambio. Se deja abierta la puerta para futuras investigaciones sobre la idea de incorporar la noción de la paridad de tipo de interés, entendida como «ley de ten-dencia», dentro de la teoría austriaca. Palabras clave: Tipo de cambio, análisis austriaco, paridad del poder adquisitivo, balanza de pagos, movimientos internacionales de capital.

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