An Analysis of The Validity of Absolute Purchasing Power Parity: The Case of Turkish Lira and British Pound

Abstract

This study aims to determine the validity of the absolute purchasing power parity between the Turkish lira and the British pound for March 2001-November 2020. Traditional unit root tests (and stationarity test) that do not take structural breaks into account and unit root tests that take structural breaks into account were used in the study. According to the results of all tests, it was found that the absolute purchasing power parity between the Turkish lira and the British pound was not valid.