Does the relative population growth affect purchasing power parity?

Does the Balassa - Samuelson theory explain the link between relative population growth and purchasing power parity ?

Relative population growth affects relative prices through the so-called BalassaSamuelson (BS) mechanism and that in turn impacts PPP. This paper empirically investigates the relationship between PPP exchange rate and relative population growth in a panel of 80 selected countries. Following the Balassa-Samuelson hypothesis this paper argues that relative population growth affects nominal wages ...

Does the Purchasing Power Parity hold within the US ? ∗

This paper investigates whether the PPP holds between four metropolitan areas in the US applying a cointegrated VAR model. Three definitions form the basis of the empirical analysis. One relates the concept of underlying inflation to the sharing of common stochastic I(2) trends. The second is simply an econometric formulation of the PPP, whereas the third allows for adjustment of price levels. ...

Nonlinear Adjustment Towards Purchasing Power Parity

The Purchasing Power Parity Debate

Our willingness to pay a certain price for foreign money must ultimately and essentially be due to the fact that this money possesses a purchasing power as against commodities and services in that country. On the other hand, when we offer so and so much of our own money, we are actually offering a purchasing power as against commodities and services in our own country. Our valuation of a foreig...

Testing the Purchasing Power Parity in Pooled

In this paper we test the purchasing power parity for the post Bretton Woods period for 18 main industrial countries. As base currencies we use alternatively the Deutsche mark, the Japanese yen, and the US dollar. We employ error correction models for single countries and on the level of pooled equations allowing eecient inference on domestic and foreign price elasticities of nominal exchange r...