Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/198144 
Authors: 
Year of Publication: 
2011
Citation: 
[Journal:] CES Working Papers [ISSN:] 2067-7693 [Volume:] 3 [Issue:] 4 [Publisher:] Alexandru Ioan Cuza University of Iasi, Centre for European Studies [Place:] Iasi [Year:] 2011 [Pages:] 524-536
Publisher: 
Alexandru Ioan Cuza University of Iasi, Centre for European Studies, Iasi
Abstract: 
Purchasing Power Parity (PPP) represents a fundamental concept in exchange rate modeling. The main idea is given by equality between prices in two different countries when expressing in the same currency. This paper aims to analyze the behavior of real exchange rate between EURO and Romanian new leu (RON) under PPP paradigm. We use the Augmented Dickey-Fuller and Phillips-Perron stationarity tests in order to check real exchange deviations from PPP. Also, we investigate the existence of a connection between long-term between nominal exchange rate and industrial producer price indices from Romania and euro area. The main conclusions of this research highlight that PPP doesn’t holds; real exchange rate stationarity tests doest not confirm the stationarity, thus between the aforementioned three variables it doesn’t exists any equilibrium relation.
Subjects: 
purchasing power parity
real exchange rate
stationarity
cointegration Romania
JEL: 
F31
C32
E31
Creative Commons License: 
cc-by Logo
Document Type: 
Article

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.