2006•University of the Western Cape Electronic Theses and Dissertations Repository (University of the Western Cape)Open access
Purchasing power parity between Botswana and South Africa: a cointegration analysis
Katso Tshipinare
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Abstract
CHAPTER ONE 1.0 Introduction……………………………………………………………………………5 1.1 Statement of the Problem……………………………………………………….……..7 1.2 Research Questions…………………………………………………………….….…..8 1.3 The Purpose of the Study……………………………………………………….….….8 1.4 Organisation of the Study……………………………………………….…………….8CHAPTER TWO 2.0 Literature review…………………………………………………………………....…9 2.1 The academic debate on the deviations from the Purchasing Power Parity…………..9 2.2 Speed of Adjustment…………………………………………………………………12 2.3 Recent Empirical Evidence…………………………………………………………..14 2.4 Purchasing power Parity Puzzle and Potential Pitfall………………………………..17 2.5 Pitfall: Temporal Aggregation……………………………………………………….17 CHAPTER THREE 3.0 Methodology…………………………………………………………………………23 3.1 Model Specification………………………………………………………………….23 3.2 Data…………………………………………………………………………………..24 3.2.1 Price Indices………………………………………………………………………..25 3.2.2Exchange Rates…………………………………………………………………….26CHAPTER FOUR 4.0 Empirical Analysis…………………………………………………………………...30 4.1 Testing for Stationarity………………………………………………………………31 4.2 Cointegration Tests…………………………………………………………………..32 5.
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