Does the single currency for EU resolve the exchange rate volatility and purchasing power parity puzzle?
This paper provides a new test of PPP and its relevance for the euro. Principal component analysis (PCA) is introduced to construct a ?pooled? measure of inflation for the 12 euro countries. This measure is used to test the PPP condition for the euro against three major currencies, namely, those of...
| Main Authors: | , |
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| Format: | Working Paper |
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School of Economics and Finance, Curtin Business School
2008
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| Subjects: | |
| Online Access: | http://hdl.handle.net/20.500.11937/24304 |