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 examines the purchasing power parity (PPP) hypothesis for the post-Bretton Woods era including the period after the introduction of the euro. The study applies a new nonlinear unit root test to the bilateral real exchange rates of both European and other industrial countries with the French franc and German mark (and the euro after 1998), as well as the US dollar as numeraire currencies. The results of the study provide stronger support for PPP than any earlier studies of bilateral PPP for industrial countries and suggest that (1) PPP tends to hold well within the European Union (EU) even before the adoption of the euro, (2) the evidence for PPP becomes more significant for both EU and non-EU countries when the sample period is extended to the euro era, and (3) convergence toward PPP between the EU countries, especially between the euro-area countries, tends to be nonlinear, while it is likely to be linear for the non-EU industrial countries.

Explains the why, how and when of the international price and volume comparisons organised by Eurostat and OECD and provides advice on the use and interpretation of Eurostat/OECD PPP figures.

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.

This book provides a thorough knowledge of the nature of the convergence criteria which states must meet in order to qualify for accession to the future Economic and Monetary Union of Europe and comprehensive coverage of both the economic and political rationale of the criteria within the framework of an international political economy approach. Thus, throughout the course of the analysis, three questions in particular are addressed: first, what is the relationship between the economics and politics of the convergence criteria; second, how do domestic and international factors impact upon their future realisation; and third what, overall, is the role of the state. This book gives valuable insights into the Economic and Monetary Union debate.

Annotation This book focuses on economic and political issues is Europe. The economy of Europe comprises more than 710 million people in 48 different states. Like other continents, the wealth of Europe's states varies, although the poorest are well above the poorest states of other continents in terms of GDP and living standards. The difference in wealth across Europe can be seen in a rough East-West divide. While Western European states all have high GDPs and living standards, many of Eastern Europe's economies are still emerging from the collapse of the USSR and former Yugoslavia. Throughout this article "Europe" and derivatives of the word are taken to include selected states that are geographically in Asia, bordering Europe - such as Azerbaijan and Cyprus. As a continent, Europe has the third largest economy in the world. Europe's largest national economy is that of Germany, which ranks third globally in nominal GDP, and fifth in purchasing power parity (PPP) GDP; and its second is that of the United Kingdom, which ranks fifth globally in nominal GDP and sixth in PPP GDP. The European Union is the world's largest (as determined by the IMF and the World Bank - 2005) or second largest economy if counted as a single unit.