Does the single currency for EU resolve the exchange rate volatility and purchasing power parity puzzle?

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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...

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Bibliographic Details
Main Authors:	Manzur, Meher, Chan, Felix
Format:	Working Paper
Published:	School of Economics and Finance, Curtin Business School 2008
Subjects:	random walk Principal component analysis Pooled inflation Purchasing power parity
Online Access:	http://hdl.handle.net/20.500.11937/24304

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