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Half‐lives of Deviations from PPP: Contrasting Traded and Nontraded Components of Consumption Baskets
Author(s) -
Kim Jaebeom
Publication year - 2004
Publication title -
review of international economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.513
H-Index - 58
eISSN - 1467-9396
pISSN - 0965-7576
DOI - 10.1111/j.1467-9396.2004.00438.x
Subject(s) - purchasing power parity , economics , consumption (sociology) , convergence (economics) , monetary economics , exchange rate , relative purchasing power parity , econometrics , international economics , macroeconomics , social science , sociology
The paper examines the convergence question by contrasting the half‐lives of deviations from purchasing power parity (PPP) across traded and nontraded goods in an exchange rate model with sticky prices. In particular, empirical results show that in most cases the half‐lives of PPP deviations for traded goods are shorter than those for total consumption and for nontraded goods.