PURCHASING POWER PARITY AND THE TURKISH EXCHANGE RATE

Abstract

This study surveys the literature on the purchasing power parity doctrine and brings empirical findings in relation to the argument. According to empirical findings there has been a common view that the purchasing power parity argument is only valid for the long run. The tests and estimations made by this paper indicate that the PPP theory does not hold for the exchange rate between Turkish lira and US dollar neither for short run nor for long run