Re-examine the long-run purchasing power parity hypothesis for a high inflation country: the case of Turkey 1980–93

Abstract

This paper examines the hypothesis of long-run purchasing Power Parity (PPP) using cointegration techniques for Turkey that experiences high inflation and structural changes coupled with high growth rates simultaneously. The results do not support any long-run bilateral exchange rate-price relationship between Turkey and each of the following countries considered to be the major trading partners of Turkey: France, Germany, the UK, and the USA.