For which countries did PPP hold? A multiple testing approach

Abstract

We employ a multiple testing technique to identify the countries for which purchasing power parity (PPP) held over the last century. The approach controls the multiplicity problem inherent in simultaneously testing for PPP on several time series, thereby avoiding spurious rejections. It has higher power than traditional multiple testing techniques by exploiting the dependence structure between the countries with a bootstrap approach. Our results show that, plausibly, thus controlling for multiplicity leads to a number of rejections of the null that is intermediate between that of traditional multiple testing techniques and that which results if one tests the null on each single time series at some level α.