ORCID
- Wang, Peijie: 0000-0002-6921-5937
Abstract
We propose a triangular PPP analytical framework, which is theoretically justified and empirically validated. The mechanisms and channels through which a seemingly mystery relationship emerges are deliberated and examined, which renders significant implications to international monetary economics, finance and business. The de facto peg of the RMB to the US dollar, together with trade activities and arrangements, causes a triangular PPP effect that the dollar euro exchange rate is not a function of the relative prices in the US and Euroland. Instead, it becomes a function of the relative prices in the PRC and Euroland. The results are supportive of triangular PPP in a three-economy world of the US, Euroland and PRC.
DOI
10.1111/twec.12656
Publication Date
2018-11-15
Publication Title
The World Economy
Volume
41
Issue
11
First Page
3071
Last Page
3097
ISSN
1467-9701
Embargo Period
2020-05-06
Organisational Unit
Plymouth Business School
Keywords
exchange rate, PPP, triangular PPP
Recommended Citation
Wang, P., & Liu, Z. (2018) 'A triangular purchasing power parity hypothesis', The World Economy, 41(11), pp. 3071-3097. Available at: https://doi.org/10.1111/twec.12656
