36-vol. 18, no. 2, july-december, 2003
Articles

Quasi purchasing power parity: Structural change in the Mexican peso/US dollar real exchange rate

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  • Antonio E. Noriega,
  • Lorena Medina
Antonio E. Noriega
Universidad de Guanajuato
DOI: https://doi.org/10.24201/ee.v18i2.183

Published 2003-07-01

Keywords

  • exchange-rate,
  • mexican peso,
  • american dollar,
  • purchasing power

How to Cite

Noriega, A. E., & Medina, L. (2003). Quasi purchasing power parity: Structural change in the Mexican peso/US dollar real exchange rate. Estudios Económicos De El Colegio De México, 18(2), 227–236. https://doi.org/10.24201/ee.v18i2.183

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Abstract

This paper analyzes whether the real exchange-rate of the Mexican peso/US dollar revert to a long-run equilibrium value, and whether this value is unique. We use a method for testing stationarity, that allows for an unknown number of structural breaks in the level of the series. Using a long span of annual data covering the period 1925-1994, our results provide evidence favoring long-run Quasi-Purchasing Power Parity. In particular, we find that the real peso/dollar exchange rate has fluctuated stationarily around a 70 year long-run level, perturbed by a series of events, both domestic and external, in or around 1981.

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