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Panel cointegration and productivity bias hypothesis

Mohsen Bahmani‐Oskooee (The Center for Research on International Economics and The Department of Economics, The University of Wisconsin‐Milwaukee, Milwaukee, Wisconsin, USA)
Ilir Miteza (Department of Social Sciences, University of Michigan Dearborn, Michigan, USA)

Journal of Economic Studies

ISSN: 0144-3585

Article publication date: 1 October 2004



Productivity bias hypothesis claims that deviation of the PPP based exchange rate from the equilibrium rate is mainly due to productivity differentials among countries. Early studies that employed cross‐sectional data in testing the hypothesis provided mixed results. A few time‐series studies have provided some support for the hypothesis. This paper relies on panel data and recent advances in panel unit‐root and panel cointegration analysis and provides strong results supporting the hypothesis. The results are not sensitive to classification of the world by regions.



Bahmani‐Oskooee, M. and Miteza, I. (2004), "Panel cointegration and productivity bias hypothesis", Journal of Economic Studies, Vol. 31 No. 5, pp. 448-456.



Emerald Group Publishing Limited

Copyright © 2004, Emerald Group Publishing Limited

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