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

Saban Nazlioglu, Mehmet Altuntas, Emre Kilic, Ilhan Kucukkkaplan

• 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.