Abstract

RODRIGUEZ BENAVIDES, Domingo; PERROTINI HERNANDEZ, Ignacio  and  SANTAMARIA GONZALEZ, Jesús. El principio de paridad del poder de compra en América Latina: Un análisis con cambio estructural. EconoQuantum [online]. 2016, vol.13, n.1, pp.159-178. ISSN 2007-9869.

The purchasing power parity (PPP) hypothesis sustaining that the real exchange rate behaves like the so-called Quasi-Qualified-PPP is tested for a sample of 17 Latin American countries. To such purpose, we apply unit root tests to a panel data with structural breaks. Further, unbiased estimates of half-life convergence of the PPP in the concerned panel data are obtained which, in turn, simultaneously adjust the various biases resulting from i) ill-aggregation of cross-section heterogeneous coefficients; ii) small sample estimates of dynamic lagged coefficients and iii) temporary aggregation of the prices of basic goods. Our results confirm the Quasi-Qualified-PPP hypothesis for a set of Latin American economies. We also found that the span of half-life is, approximately, 4 years, with a 95% confidence interval of 2.7 to 6.8 years.

Keywords : Purchasing power parity; panel unit roots tests with breaks; Latin America.

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