Journal of
African Studies and Development

  • Abbreviation: J. Afr. Stud. Dev
  • Language: English
  • ISSN: 2141-2189
  • DOI: 10.5897/JASD
  • Start Year: 2009
  • Published Articles: 171

Full Length Research Paper

Testing the PPP hypothesis in the Sub-saharan countries

Guglielmo Maria Caporale1* and Luis A. Gil-Alana2
  1Brunel University, London, UK. 2University of Navarra, Pamplona, Spain
Email: [email protected]

  •  Accepted: 01 July 2013
  •  Published: 31 August 2013

Abstract

 

This paper examines the Purchasing Power Parity (PPP) hypothesis in a number of Sub-Saharan countries by testing the order of integration in the log of their real exchange rates vis-à-vis the US dollar. I(d) estimation techniques based on both asymptotic and finite sample results are used. The test results led to the rejection of PPP in all cases: orders of integration below 1 are found in fourteen countries, but the unit root null cannot be rejected.

 

Key words: Purchasing Power Parity (PPP), fractional integration.

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