Further evidence on the validity of purchasing power parity in selected African countries

Gyamfi, Emmanuel Numapau; Appiah, E. F.

doi:10.1007/s12197-018-9449-7

Cited by 4 publications

(2 citation statements)

References 48 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…In other words, only Cabo Verde and Libya fail to have goods market integration with China. Our rank test results differ from those of Gyamfi and Appiah (2019) in which rank problems were not removed. The power of the rank test for Model

{\rm{I\text{'}}}

is higher than that for Model I (unreported) due to removal of the rank problem, and is higher than that for Model II possibly due to relaxation of parameter restrictions not supported by the data.…”

Section: Resultscontrasting

confidence: 99%

Tests of goods market integration between China and African BRI countries

Lee,

Shum,

Woo

2023

International Studies of Economics

View full text Add to dashboard Cite

The Chinese Government has promulgated the “Belt and Road Initiative” (BRI) to increase trade flows and integrate goods markets between China and BRI countries. The validity of purchasing power parity (PPP) implies well‐integrated goods markets, a precondition for further economic convergence, and the next stage of economic integration in factor, service, and financial markets. Our study aims to examine the validity of the PPP and the extent of goods market integration between China and selected BRI countries in Africa. Since the functional form of the cointegrating relationship may not be exact or linear, we adopt the nonparametric rank tests for analysis without prior knowledge and specification of the functional form. We also address the rank problems that occur in multivariate rank tests. Our empirical results provide strong evidence of an unrestricted PPP relationship with reasonably strong evidence of nonlinearity in the data. We also find that some African BRI countries have experienced goods market integration with China during the second‐half period only. This indicates that the introduction of the BRI in 2013 and China's active involvement in African economic development through BRI projects are leading to enhanced goods market integration between China and Africa. The results indicate favorable prospects of closer economic cooperation in the factor, service, and financial markets to build a free trade area or common markets with BRI countries in Africa.

show abstract

{\rm{I\text{'}}}

Section: Resultscontrasting

confidence: 99%

Tests of goods market integration between China and African BRI countries

Lee,

Shum,

Woo

2023

International Studies of Economics

View full text Add to dashboard Cite

show abstract

“…Yilanci et al, (2018) showed that both the cointegration and Fourier ADL cointegration checks showed a significant relationship between the exchange rates and prices for 8 of 14 African countries. Gyamfi and Appiah (2019) indicated strong evidence against the PPP theory in 16 African countries. She et al, (2021) checked the unit roots real exchange rates of Pakistani rupees against the main international trade countries and showed that the FADF unit root test supported the PPP, while the FKPSS test confirmed the PPP for 12 exchange rates.…”

Section: Previous Researchmentioning

confidence: 99%

An Approach for Determining Exchange Rates: The Mixture of the Purchasing Power Parity Model and the Chartist Model

Kurihara

2024

Preprint

View full text Add to dashboard Cite

In the medium- and long-run, prices rather than interest rates are thought to have an effect on exchange rates, and the purchasing power parity (PPP) theory, which posits as a determining factor in exchange rates, has been used not only in academic fields but also in practice. This study considers that exchange rates are determined by the mixture of past exchange rates and the PPP theory. On the other hand, it is often pointed out that the actual exchange rate diverges significantly from the exchange rate derived from the PPP theory. Moreover, this study hypothesizes that when the deviation becomes large, there will be a movement to correct the deviation. The empirical estimations show that when the deviation is large, such movement cannot be found and when the deviation is small, there is a movement toward correction.

show abstract

The long-run validity of PPP in some major advanced and emerging countries using alternative models

Kyei-Mensah

2023

Cogent Economics & Finance

View full text Add to dashboard Cite

Further evidence on the validity of purchasing power parity in selected African countries

Cited by 4 publications

References 48 publications

Tests of goods market integration between China and African BRI countries

Tests of goods market integration between China and African BRI countries

An Approach for Determining Exchange Rates: The Mixture of the Purchasing Power Parity Model and the Chartist Model

The long-run validity of PPP in some major advanced and emerging countries using alternative models

Contact Info

Product

Resources

About