Saban Nazlioglu, Mehmet Altuntas, Emre Kilic and Ilhan Kucukkkaplan
This paper aims to test purchasing power parity (PPP) hypothesis for Greece, Italy, Ireland, Portugal and Spain, which are known as the GIIPS countries.
Abstract
Purpose
This paper aims to test purchasing power parity (PPP) hypothesis for Greece, Italy, Ireland, Portugal and Spain, which are known as the GIIPS countries.
Design/methodology/approach
The authors conduct a comprehensive analysis by using unit root approaches without and with structural breaks and non-linearity.
Findings
The PPP is valid for the GIIPS countries. Considering structural breaks in non-linear framework plays a crucial role.
Originality/value
There is no empirical study testing PPP hypothesis by focusing on the GIIPS countries. This study further takes into account for structural breaks and non-linearity in the real exchange rates of these countries.