Prague Economic Papers 2018, 27(4):417-426 | DOI: 10.18267/j.pep.654

The Validity of Purchasing Power Parity in BRICS Countries

Burak Güriş1, Muhammed Tiraşoğlu2
1 Faculty of Economics, Istanbul University, Istanbul, Turkey (bguris@istanbul.edu.tr)
2 Faculty of Economics and Administrative Sciences, Kirklareli Universty, Kirklareli, Turkey (muhammedtirasoglu@klu.edu.tr)

It is observed that purchasing power parity (PPP) as one of the controversial and most interesting topics of international macroeconomics literature is tested by using different econometric methods for certain countries and/or country groups by many researchers. The validity of PPP is important in terms of being a common exchange rate used in international comparison. In this context, the validity of relative purchasing power parities in the BRICS countries (Brazil, Russia, India, China and South Africa) were analysed for the January 1993-March 2015 period. Non-linear stationarity analysis was used in the study. According to the findings of the analysis, it was concluded that all of the BRICS countries have a non-linear structure; the PPP approach was valid for Brazil and South Africa, but not valid for Russia, India and China in the relevant period.

Keywords: purchasing power parity, BRICS countries, Fourier stationary test, nonlinearity
JEL classification: C22, F31

Published: August 1, 2018  Show citation

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Güriş, B., & Tiraşoğlu, M. (2018). The Validity of Purchasing Power Parity in BRICS Countries. Prague Economic Papers, 27(4), 417-426. doi: 10.18267/j.pep.654
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