2010
DOI: 10.1111/j.1813-6982.2010.01231.x
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Purchasing Power Parity in African Countries: Evidence From Panel Suradf Test

Abstract: This study reexamines the validity of long-run purchasing power parity (PPP) hypothesis using a battery of panel unit root tests for 11 developing countries in Africa over the period 1980-2007. Based on the conventional panel unit root tests, we found evidence that the monthly real exchange rates in these countries were mean reverting. By contrast, the series-specific unit root test proposed by Breuer et al. (SURADF) reveals that only six of the 11 RERs series were stationary using the US dollar as reference… Show more

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Cited by 11 publications
(11 citation statements)
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References 56 publications
(130 reference statements)
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“…It is worth noting that the results of this study differ from those obtained by Bahmani‐Oskooee and Gelan (2006), Doganlar et al . (2009) and Baharumshah et al . (2010), most probably due to the differences in the employed econometric methodologies and time span.…”
Section: Data and Empirical Resultsmentioning
confidence: 98%
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“…It is worth noting that the results of this study differ from those obtained by Bahmani‐Oskooee and Gelan (2006), Doganlar et al . (2009) and Baharumshah et al . (2010), most probably due to the differences in the employed econometric methodologies and time span.…”
Section: Data and Empirical Resultsmentioning
confidence: 98%
“…The PPP theory can also be used to compare the average costs of goods and services between markets and plays an important role in the choice between money, inflation or exchange rate targeting in the formulation of monetary policy as stated by Baharumshah et al . (2010).…”
Section: Introductionmentioning
confidence: 99%
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“…Yet the trade and exchange rate reforms in this region are largely driven by PPP-based frameworks (see World Bank, 1996;Kargbo, 2003a). The representative studies of the PPP hypothesis in the WAMZ region include Adler and Lehman (1983), Madhavi and Zhou (1994), Nagayasu (1998), Salehizadeh and Taylor (1999), Holmes (2000), Odedokun (2000), Kargbo (2003aKargbo ( , 2003bKargbo ( , and 2004, Alagidede et al (2008), and Baharumshah et al (2010). As in studies on other countries, the findings from these representative studies are also conflicting.…”
Section: Introductionmentioning
confidence: 86%
“…Finally, Baharumshah et al (2010) also study the long-run PPP hypothesis using panel data stationarity tests for 11 African countries which include Ghana and Nigeria. These authors utilize conventional panel data stationarity techniques, as well as a series-specific stationarity technique; the seemingly unrelated regressions augmented Dickey-Fuller (SURADF) proposed by Breuer et al (2002), to examine the long-run PPP in these countries.…”
Section: The Representative Literaturementioning
confidence: 99%