This paper examines the Purchasing Power Parity (PPP) hypothesis in a number of Sub-Saharan countries by testing the order of integration in the log of their real exchange rates vis-à-vis the US dollar. I(d) estimation techniques based on both asymptotic and finite sample results are used. The test results led to the rejection of PPP in all cases: orders of integration below 1 are found in fourteen countries, but the unit root null cannot be rejected.
Testing the PPP Hypothesis in the Sub-Saharan Countries
Luis A. Gil-Alaña
Guglielmo Maria Caporale
Journal of African Studies and Development, Vol. 5, Issue 4