PURCHASING POWER PARITY TESTING UNIT ROOT TESTS WITH STRUCTURAL BREAK IN TURKEY

Büyükkantarcı Tolgay S., Kula F.

Revista Economică , vol.71, no.1, pp.89-98, 2019 (Peer-Reviewed Journal)

  • Publication Type: Article / Article
  • Volume: 71 Issue: 1
  • Publication Date: 2019
  • Journal Name: Revista Economică
  • Journal Indexes: EBSCO Education Source
  • Page Numbers: pp.89-98
  • Kayseri University Affiliated: No

Abstract

In this study, PPP, which has been the most important of many studies over the years as the exchange rate determination method in the literature, between 2003 January and 2017 August was tested for its validity in Turkey. The PPP was analyzed by ADF - PP and Lee-Strazicich fracture unit root tests in the study. Results of the study, the real exchange rate was not stable in the classical unit root tests. Three break-up dates were determined by Lee-Strazicich fracture root tests and it was determined that PPP was valid in case of structural breaks.