ABSTRACT
This paper tests the validity of Purchasing Power Parity (PPP) hypothesis for two
Anglophone ECOWAS members, Nigeria and Ghana. The researcher tested the relative
PPP equation. It also employed the ADF univariate Unit Root test for the stationarity of
the exchange rates of each of the countries. Exchange rates and CPIs data for all
countries were collected on annual basis for the period between 1970 and 2005. The
results show the non-rejection of the null hypothesis of the failure of PPP for both
countries. The results of the unit root tests show that exchange rates of both countries
follow mean reversion. Their respective exchange rates and inflation d~flerentialsw ere
found to be stationary at the same order of integration. Consequently in both cases,
cointegration is suspected, though this study did not investigate the evidence of
cointegration because even if it exists, evidence of long-run relationship between NIGH
and NIGINF, GHANH and GHANINF is provided. The study went ahead to establish
that the purchasing power of Ghanaian Cedi is superior to that of Nigerian Naira. From
the policy point of view, PPP can be used to assess the levels of exchange rates.
R., O (2021). An Empirical Analysis of Purchasing Power Parity: A Case Study of Two Anglophone Ecowas Members. Afribary. Retrieved from https://track.afribary.com/works/an-empirical-analysis-of-purchasing-power-parity-a-case-study-of-two-anglophone-ecowas-members
R., OGUANOBI "An Empirical Analysis of Purchasing Power Parity: A Case Study of Two Anglophone Ecowas Members" Afribary. Afribary, 14 May. 2021, https://track.afribary.com/works/an-empirical-analysis-of-purchasing-power-parity-a-case-study-of-two-anglophone-ecowas-members. Accessed 25 Nov. 2024.
R., OGUANOBI . "An Empirical Analysis of Purchasing Power Parity: A Case Study of Two Anglophone Ecowas Members". Afribary, Afribary, 14 May. 2021. Web. 25 Nov. 2024. < https://track.afribary.com/works/an-empirical-analysis-of-purchasing-power-parity-a-case-study-of-two-anglophone-ecowas-members >.
R., OGUANOBI . "An Empirical Analysis of Purchasing Power Parity: A Case Study of Two Anglophone Ecowas Members" Afribary (2021). Accessed November 25, 2024. https://track.afribary.com/works/an-empirical-analysis-of-purchasing-power-parity-a-case-study-of-two-anglophone-ecowas-members