01891cas a2200301 a 4500 AALejournalIMF009713 230101c9999 xx r poo 0 0eng d 5.00 USD 9781451868500 1018-5941 BD-DhAAL BD-DhAAL Lyhagen, Johan. Testing for Purchasing Power Parity in Cointegrated Panels / Johan Lyhagen, Par Osterholm, Mikael Carlsson. Washington, D.C. : International Monetary Fund, 2007. 1 online resource (19 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students This paper applies the maximum likelihood panel cointegration method of Larsson and Lyhagen (2007) to test the strong PPP hypothesis using data for the G7 countries. This method is robust in several important dimensions relative to previous methods, including the well-known issue of cross-sectional dependence of error terms. The findings using this new method are contrasted to those from the Pedroni (1995) cointegration tests and fully modified OLS and dynamic OLS esimators of the cointegrating vectors. Our overall results are the same across all approaches: The strong PPP hypothesis is rejected in favour of weak PPP with heterogenenous cointegrating vectors. Mode of access: Internet Integrating Vector imf WP imf Italy imf Carlsson, Mikael. Osterholm, Par. IMF Working Papers; Working Paper ; No. 2007/287 Full text available on IMF http://elibrary.imf.org/view/journals/001/2007/287/001.2007.issue-287-en.xml IMF e-Library