Nonlinear Cointegration and Asymmetric Adjustment in Purchasing Power Parity of the USA, Germany, and Pakistan
The current study explores nonlinear cointegration as well as asymmetric adjustment to investigate the long-run purchasing power parity in three major trading partners of Pakistan. The ESTAR and LSTAR models were used to investigate the behavior of the nominal exchange rates. The findings declared t...
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| Main Authors: | , , , |
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| Format: | Article |
| Language: | English |
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Wiley
2021-01-01
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| Series: | Complexity |
| Online Access: | http://dx.doi.org/10.1155/2021/1555091 |
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| _version_ | 1850172563244711936 |
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| author | Kashif Ali Hafsa Hina Muhammad Ijaz Mahmoud El-Morshedy |
| author_facet | Kashif Ali Hafsa Hina Muhammad Ijaz Mahmoud El-Morshedy |
| author_sort | Kashif Ali |
| collection | DOAJ |
| description | The current study explores nonlinear cointegration as well as asymmetric adjustment to investigate the long-run purchasing power parity in three major trading partners of Pakistan. The ESTAR and LSTAR models were used to investigate the behavior of the nominal exchange rates. The findings declared that series follows the nonlinear exchange rate. The asymmetric behavior of the exchange rate allows the threshold cointegration model to be implemented. In the case of Pakistan-China, the result suggests that long-run PPP holds. As a result, trading will be more profitable if the exchange rate is varied in relation to major trading partners rather than just the US dollar. |
| format | Article |
| id | doaj-art-cdead9323e884e4387a4cf467a991b4d |
| institution | OA Journals |
| issn | 1099-0526 |
| language | English |
| publishDate | 2021-01-01 |
| publisher | Wiley |
| record_format | Article |
| series | Complexity |
| spelling | doaj-art-cdead9323e884e4387a4cf467a991b4d2025-08-20T02:20:02ZengWileyComplexity1099-05262021-01-01202110.1155/2021/1555091Nonlinear Cointegration and Asymmetric Adjustment in Purchasing Power Parity of the USA, Germany, and PakistanKashif Ali0Hafsa Hina1Muhammad Ijaz2Mahmoud El-Morshedy3Department of StatisticsDepartment of Econometrics and StatisticsDepartment of Mathematics and StatisticsDepartment of MathematicsThe current study explores nonlinear cointegration as well as asymmetric adjustment to investigate the long-run purchasing power parity in three major trading partners of Pakistan. The ESTAR and LSTAR models were used to investigate the behavior of the nominal exchange rates. The findings declared that series follows the nonlinear exchange rate. The asymmetric behavior of the exchange rate allows the threshold cointegration model to be implemented. In the case of Pakistan-China, the result suggests that long-run PPP holds. As a result, trading will be more profitable if the exchange rate is varied in relation to major trading partners rather than just the US dollar.http://dx.doi.org/10.1155/2021/1555091 |
| spellingShingle | Kashif Ali Hafsa Hina Muhammad Ijaz Mahmoud El-Morshedy Nonlinear Cointegration and Asymmetric Adjustment in Purchasing Power Parity of the USA, Germany, and Pakistan Complexity |
| title | Nonlinear Cointegration and Asymmetric Adjustment in Purchasing Power Parity of the USA, Germany, and Pakistan |
| title_full | Nonlinear Cointegration and Asymmetric Adjustment in Purchasing Power Parity of the USA, Germany, and Pakistan |
| title_fullStr | Nonlinear Cointegration and Asymmetric Adjustment in Purchasing Power Parity of the USA, Germany, and Pakistan |
| title_full_unstemmed | Nonlinear Cointegration and Asymmetric Adjustment in Purchasing Power Parity of the USA, Germany, and Pakistan |
| title_short | Nonlinear Cointegration and Asymmetric Adjustment in Purchasing Power Parity of the USA, Germany, and Pakistan |
| title_sort | nonlinear cointegration and asymmetric adjustment in purchasing power parity of the usa germany and pakistan |
| url | http://dx.doi.org/10.1155/2021/1555091 |
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