{"title":"On the functional form of PPP: the case of nine new EU countries","authors":"Y. Hsing","doi":"10.1080/17446540701765225","DOIUrl":null,"url":null,"abstract":"This article applies the extended Box–Cox model to test functional forms of purchasing power parity (PPP) for nine new EU countries. It finds that the widely used double-log form for PPP can be rejected for eight countries except for the Czech Republic and that the unitary elasticity can be rejected for eight countries except for Slovenia. Hence, most countries have a nonlinear functional form of PPP and exhibit a nonunitary elasticity.","PeriodicalId":345744,"journal":{"name":"Applied Financial Economics Letters","volume":"55 1","pages":"0"},"PeriodicalIF":0.0000,"publicationDate":"2008-10-18","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"1","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Applied Financial Economics Letters","FirstCategoryId":"1085","ListUrlMain":"https://doi.org/10.1080/17446540701765225","RegionNum":0,"RegionCategory":null,"ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"","JCRName":"","Score":null,"Total":0}
引用次数: 1
Abstract
This article applies the extended Box–Cox model to test functional forms of purchasing power parity (PPP) for nine new EU countries. It finds that the widely used double-log form for PPP can be rejected for eight countries except for the Czech Republic and that the unitary elasticity can be rejected for eight countries except for Slovenia. Hence, most countries have a nonlinear functional form of PPP and exhibit a nonunitary elasticity.
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