The black market exchange rate vs. the official rate in testing PPP: Which rate fosters the adjustment process?

C-Tier
Journal: Economics Letters
Year: 2008
Volume: 99
Issue: 1
Pages: 40-43

Score contribution per author:

0.503 = (α=2.01 / 2 authors) × 0.5x C-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

In testing the purchasing power parity theory (PPP) researchers hardly pay attention to the speed with which the exchange rate adjusts to a change in relative prices. In this paper we show that the speed of adjustment is faster when the black market exchange rate is used in testing the PPP as compared to the official exchange rate. This could be another reason as to why central banks should unify the two rates.

Technical Details

RePEc Handle
repec:eee:ecolet:v:99:y:2008:i:1:p:40-43
Journal Field
General
Author Count
2
Added to Database
2026-01-24