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Purchasing power parity in a transition country: the case of Croatia/ created by Marina Tkalec and Maruška Vizek

By: Contributor(s): Material type: TextTextSeries: Comparative economic studies ; Volume 53, number 2Basingstoke: Palgrave Macmillan, 2011Content type:
  • text
Media type:
  • unmediated
Carrier type:
  • volume
ISSN:
  • 08887233
Subject(s): LOC classification:
  • HB90 COM
Online resources: Abstract: We explore the validity of the purchasing power parity (PPP) hypothesis in the case of Croatia. Two cointegration methods were used: Johansen cointegration that assumes symmetry and threshold cointegration that allows for asymmetric adjustment in the short run. The results suggest that in the long run the absolute power parity condition holds, that is, that the exchange rate is aligned with the fundamentals and no depreciation is needed. The error correction model does not confirm the existence of exchange rate pass-through to domestic consumer prices. Threshold cointegration results suggest that the adjustment of deviations from PPP is not asymmetric.
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Holdings
Item type Current library Call number Vol info Copy number Status Notes Date due Barcode
Journal Article Journal Article Main Library - Special Collections HB90 COM (Browse shelf(Opens below)) Vol. 53, no.2 (pages 223-238) SP11434 Not for loan For In House Use Only

We explore the validity of the purchasing power parity (PPP) hypothesis in the case of Croatia. Two cointegration methods were used: Johansen cointegration that assumes symmetry and threshold cointegration that allows for asymmetric adjustment in the short run. The results suggest that in the long run the absolute power parity condition holds, that is, that the exchange rate is aligned with the fundamentals and no depreciation is needed. The error correction model does not confirm the existence of exchange rate pass-through to domestic consumer prices. Threshold cointegration results suggest that the adjustment of deviations from PPP is not asymmetric.

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