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PPP in the Very Long Run: 300 Years of Swedish Trade
Uppsala University, Disciplinary Domain of Humanities and Social Sciences, Faculty of Social Sciences, Department of Economics.
Uppsala University, Disciplinary Domain of Humanities and Social Sciences, Faculty of Social Sciences, Department of Economics.
2015 (English)Independent thesis Basic level (degree of Bachelor), 10 credits / 15 HE creditsStudent thesis
Abstract [en]

The purpose of this paper is to test the PPP theory, a cornerstone of many standard economic models, but with varied empirical support. In order to address the problems with low statistical power present in many studies using short samples in the time dimension this paper test data spanning 303 years of North European trade, using a cointegration approach. The main result of this paper is that support for PPP can be found in the studied period. Furthermore, the estimated reversion speed towards the equilibrium real exchange rate confirms results from previous studies on much shorter samples.

Syftet med studien är att testa köpkraftsparitetsteorin, en hörnsten i många ekonomiska standardmodeller med ett blandat empiriskt stöd. För att lösa problemet med bristande statistisk styrka som försvårat analysen i många tidigare studier med kortare tidsserier testas teorin med hjälp av 303 år nordeuropeisk handel med en typ av kointegrationsmetod. Arbetets huvudresultat är att stöd för PPP kan återfinnas i den studerade perioden. Vidare bekräftar de skattade återgångshastigheterna till den reala växelkursens jämviktsläge vad tidigare studier, på kortare tidsperioder, kommit fram till.

Place, publisher, year, edition, pages
2015.
Keyword [en]
PPP, long run, cointegration, power
National Category
Economics
Identifiers
URN: urn:nbn:se:uu:diva-254693OAI: oai:DiVA.org:uu-254693DiVA: diva2:819306
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Available from: 2015-06-10 Created: 2015-06-10 Last updated: 2015-06-10Bibliographically approved

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Citation style
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  • de-DE
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  • nn-NB
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Output format
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  • asciidoc
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