Projects per year
Abstract
Declaring a currency to be mispriced is fraught with uncertainties. In this article, these uncertainties are explicitly recognized in a model of pricing a homogeneous commodity around the world. This allows for a common driver of prices, due to a base-currency effect, and country-specific factors that lead to departures from absolute PPP on account of income differences, local taxes and charges, etc. This approach leads to estimates of currency mispricing whose significance can be tested in the usual way. Using Big Mac prices, we show that the approach has advantages over the popular Big Mac Index to currency valuation.
Original language | English |
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Pages (from-to) | 2297-2312 |
Number of pages | 16 |
Journal | Applied Economics |
Volume | 50 |
Issue number | 20 |
Early online date | 6 Nov 2017 |
DOIs | |
Publication status | Published - 27 Apr 2018 |
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Dive into the research topics of 'Uncertainty in currency mispricing'. Together they form a unique fingerprint.Projects
- 1 Finished
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Analysing Global Consumption Patterns with a Large Number of Commodities
Clements, K. (Investigator 01)
ARC Australian Research Council
1/01/13 → 31/12/17
Project: Research