The goal of this paper is to investigate the validity of PPP for a heterogeneous group of 12 transition countries with respect to dollar and euro. The analysis relies on monthly data frequency covering the period of 1994-2008. The first generation of panel unit root tests is based on the cross-sectional independency hypothesis. This paper applies five first generation unit root tests. The cross-sectional independency hypothesis is rather restrictive and somewhat unrealistic in the majority of macroeconomic applications of unit root tests. Thus, the second generation of panel unit root tests is characterized by the rejection of the cross-sectional independence hypothesis. Within this second generation of tests, two main approaches are distinguished. The first one relies on the factor structure approach. The second approach consists of imposing few or none restrictions on the residuals covariance matrix and has been adopted the use of nonlinear instrumental variables methods or the use of bootstrap approaches to solve the nuisance parameter problem due to cross-sectional dependency. We employ several second generation panel unit root tests in this paper to scrutinize the validity of PPP theory.

This bachelorthesis investigates whether purchasing power parity holds better among EU members than in the usual samples of major industrialized countries. European real exchange rates against the German mark / the euro are tested for unit roots using the Levin, Lin and Chu test. Results show evidence of stationary real exchange rates similar to results reported in the literature. The unit root hypothesis can be rejected at the five percent level for a panel of twelve European countries from 1979 to 2006. From 1999 to 2006, the unit root hypothesis can be rejected at the one percent level for the EU 25 and the EU 15, and at the five percent level for a panel of the ten countries joining the EU in 2004. The half-life of deviations from parity is estimated to be three and a half years from 1979 to 2006 and two and a half years from 1999 to 2006.

This paper investigates the regularities of the transition processes in countries at different levels of transformation from 1994-1998. Twenty-four countries are involved into the analysis and the indicator of welfare is used for analysis. Welfare is measured by the production of gross product per capita, which is adjusted with purchasing power parity (GDP-PPP). The 24 countries will be divided into three groups according to the level of transformation, using the canonical discriminant analysis. The basis of the analysis will be the transition index computed by EBRD. For each group, a component analysis related to various economic indicators will be used. From the results, four transition components will be formed. The effect of the obtained transition components on welfare will be examined with the help of regression analysis, the results of which are the basis for interpreting the causes of welfare changes. The paper concludes that the main factor determining welfare is the development level of a country. Other factors have less influence.

This manual gives a complete, detailed and up-to-date description of the Eurostat-OECD PPP Programme, including its organisation, the various surveys carried out by participating countries and the ways PPPs are calculated and disseminated. It also provides guidance on the use of PPPs.

International Academic Conference on Management, Economics and Marketing in Bratislava, Slovakia 2016 (IAC-MEM 2016), Wednesday - Thursday, July 6 - 7, 2016