Home bias and purchasing power parity: Evidence from the G-7 countries (Journal article)

Mylonidis, N./ Sideris, D.


Recent studies in the international economics literature emphasize the role of home bias in explaining a number of empirical puzzles. In the present study, we test for the following hypotheses: (i) that a home bias effect, which is nevertheless failing over time as traded goods markets become more integrated and consumption preferences become more similar across developed countries, influences the relationship among nominal exchange rates, domestic and foreign prices, and (ii) that incorporation of the home bias effect in the empirical specification of PPP enhances the robustness of the theory. We perform a panel data analysis using quarterly observations for the G-7 economies in the post-Bretton Woods era. The results confirm our hypotheses. Copyright (C) 2007 John Wiley & Sons, Ltd.
Institution and School/Department of submitter: Πανεπιστήμιο Ιωαννίνων. Σχολή Οικονομικών και Κοινωνικών Επιστημών. Τμήμα Οικονομικών Επιστημών
Keywords: ppp,home bias,panel data,real exchange-rates,behavior,policy,tests
URI: http://olympias.lib.uoi.gr/jspui/handle/123456789/11188
ISSN: 1076-9307
Link: <Go to ISI>://000254888900006
Appears in Collections:Άρθρα σε επιστημονικά περιοδικά ( Ανοικτά)

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