Purpose
This paper aims to test purchasing power parity (PPP) hypothesis for Greece, Italy, Ireland, Portugal and Spain, which are known as the GIIPS countries.
Design/methodology/approach
The authors conduct a comprehensive analysis by using unit root approaches without and with structural breaks and non-linearity.
Findings
The PPP is valid for the GIIPS countries. Considering structural breaks in non-linear framework plays a crucial role.
Originality/value
There is no empirical study testing PPP hypothesis by focusing on the GIIPS countries. This study further takes into account for structural breaks and non-linearity in the real exchange rates of these countries.