Purchasing power parity in GIIPS countries: evidence from unit root tests with breaks and non-linearity

• Saban Nazlioglu ^[1] ; Mehmet Altuntas ^[1] ; Emre Kilic ^[1] ; Ilhan Kucukkkaplan ^[2]
  1. [1] Nişantaşı University

     Nişantaşı University

     Turquía

     
  2. [2] Pamukkale University

     Pamukkale University

     Turquía

     
• Localización: Applied economic analysis, ISSN 2632-7627, Vol. 30, Nº. 90, 2022, págs. 176-195
• Idioma: inglés
• Enlaces
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• Resumen

  • Abstract 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.