Purchasing Power Parity and Breaking Trend Functions in the Real Exchange Rate

Borradores de Economia
Number: 
564
Published: 
Classification JEL: 
C22, F31, F40, N70
Keywords: 
Human capital agglomeration, Social returns, Private returns, Externalities, Uncertainty, Fiscal policy
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This paper provides evidence of long run purchasing power parity by performing a recently developed method to test for unit roots in the presence of structural breaks. Data consist of real exchange rate series for 20 countries including developed and deve