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

SELMA Büyükkantarcı Tolgay, Erciyes University, Turkey

FERİT Kula , Erciyes University, Turkey

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.

Keywords: Exchange Rate, Purchasing Power Parity, ADF, PP, Unit Root Tests, Lee-Strazicich Structural Unit Root Tests

JEL Classification:

Volume: 71, Issue: 1

Pages: 89 - 98

Publication date: March, 2019

Download the article: http://economice.ulbsibiu.ro/revista.economica/archive/71109selma&ferit.pdf

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