Theoretical and Applied Economics
No. 4 / 2025 (645), Winter
Purchasing Power Parity theory in exchange rate determination: evidences from the G-20 nations
Alasala College, Saudi Arabia
Moid U AHMAD
Scholeio Education and Evolving Knowledge, India
AK SINHA
Fortune Institute of International Business, India
Abstract. This research work is focused on evaluating the Purchasing Power Parity (PPP) theory using a sample of the top 20 economies of the world (G-20 countries) for the time period 1960-2022. The primary objective of the research is to understand the implications and utility of PPP theory in the context of time. Additionally, the research aims to test the effectiveness of the PPP theory in the exchange rate determination process. The study relies on derived and actual measures of exchange rates for analysis. It also tries to develop a model for exchange rate determination based on the PPP theory and do a comparative analysis of the results. The study highlights the inefficiencies and efficiencies of the system to suggest for areas of improvement with effective policy implications. The research has found more conclusive evidence supporting the PPP theory in short to medium term rather than long term. Also, it highlights that the actual exchange rates are not caused by price and inflation dynamics, contrary to the common rationale.
Contents
Dynamic risk spillovers in European Stock Markets: a TVP-VAR Approach
Co-movement and causality among exchange rates: a wavelet analysis
Financial development and economic growth in emerging economies: the mediating role of entrepreneurship
House prices and macroprudential policy in the Romanian economy: evidence from a BVAR analysis
The impact of short-run and long-run dynamics on manufacturing sector development in Indonesia and Malaysia
Purchasing Power Parity theory in exchange rate determination: evidences from the G-20 nations
Assessment of external macroeconomic imbalances in Romania
Remittances and domestic demand: evidence from Romania
How do energy consumption, natural resources, trade openness and FDI affect environmental quality in Algeria? Fresh insights from the novel DYNARDL simulations and KRLS approach
The acceleration of education: professors, AI platforms and the transformation of learning and human growth
Poverty, unemployment, and mental health: differential impacts among university graduates in Kenya, South Africa, Uganda, and Zambia
Assessing the relationship between institutions and economic development
Cedi depreciation and petroleum price shocks: economic interlinkages and macroeconomic implications
Effects of climate change on food security and sustainable development in Saudi Arabia: Autoregressive Distributed Lag approach
Corruption in digital environments
Beyond linearity: an ARDL threshold analysis of inflation's impact on Tanzania's economic growth from 1994 to 2024
Sustainable consumption and experimental economics – a bibliometric analysis
Heterogeneous and dynamic impacts of growth, urbanization, deforestation, and energy intensity on environmental degradation in Africa using the MM-Quantile regression method
Institutional governance in developing countries, political factors as drivers of institutional change: evidence from sub-Saharan Africa