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ARDL Approach to Test the Productivity Bias Hypothesis
Author(s) -
BahmaniOskooee Mohsen,
Nasir A. B. M.
Publication year - 2004
Publication title -
review of development economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.531
H-Index - 50
eISSN - 1467-9361
pISSN - 1363-6669
DOI - 10.1111/j.1467-9361.2004.00247.x
Subject(s) - cointegration , economics , econometrics , currency , productivity , test (biology) , sample (material) , statistical hypothesis testing , macroeconomics , statistics , mathematics , paleontology , chemistry , chromatography , biology
The productivity bias hypothesis states that a relatively more productive country should experience a real appreciation of its currency. Most studies in the literature that have tested the hypothesis have employed cross‐sectional data. Only a few studies have used time‐series data and they have tested the hypothesis for only a small number of countries. In this paper the authors test the hypothesis by using time‐series data over the 1960–90 period for a sample of 44 countries and with a relatively new method of cointegration known as the ARDL approach. For most countries there is strong evidence supporting the hypothesis.