Abstract.This paper deals with the analysis of the monthly values of the V4 countries (Visegrád countries) national currencies against the euro in order to test the validity of the purchasing power parity (PPP). The analysis was done in two ways - through testing of the real exchange rates stationarity and through the cointegration theory. According to the results it is possible to conclude that the validity of the PPP is in cases of all the analysed exchange rates problematic.

Received: November 11, 2006

AMS Subject Classification: 91B84, 62P20

Key Words and Phrases: exchange rates, purchasing power parity, V4 countries, stationarity, ADF test, cointegration theory, Engle-Granger procedure

Source: International Journal of Pure and Applied Mathematics
ISSN: 1311-8080
Year: 2007
Volume: 35
Issue: 1