Journal Description Editorial Committee How to Subscribe Forthcoming Articles Staff Papers Archive Copyright Information Use the free Adobe Acrobat Reader to view pdf files Free Email Notification Receive emails when we post new
items of interest to you. |
|
|
|
Purchasing Power Parity and the Real Exchange Rate Lucio Sarno and Mark P. Taylor Full Text of this Article (PDF 171K) Abstract: We assess the progress made by the profession in understanding
real exchange rate behavior through a selective and critical, but nonetheless
expository, review of the literature. Our reading of the literature leads
us to the main conclusions that purchasing power parity might be viewed
as a valid long-run international parity condition when applied to bilateral
exchange rates obtaining among major industrialized countries, and that
mean reversion in real exchange rates displays significant nonlinearities.
However, further work investigating the effects of real shocks on the
long-run equilibrium level also seems warranted. © 2002 International Monetary Fund |
|||
