Purchasing Power Parity in B5 Countries: How Important Are Tourism Prices?
Purchasing Power Parity in B5 Countries: How Important Are Tourism Prices?

Author(s): Jani Beko, Darja Boršič
Subject(s): Economy, Tourism
Published by: Udruženje ekonomista i menadžera Balkana
Keywords: Panel unit root tests; Panel cointegration tests; Tourism sector; Consumer price indices for hotels and restaurants
Summary/Abstract: This chapter examines the PPP hypothesis in five Balkan countries (B5). The current analysis incorporates four important novelties. First, from a methodological standpoint, the PPP is scrutinized by a range of first-generation and second-generation panel unit root tests. Additionally, three panel cointegration tests are performed: the Pedroni residual cointegration test, the Kao residual cointegration test and the Johansen Fisher cointegration test. Second, the study utilizes two price indicators: the consumer price index for hotels and restaurants and the general consumer price index. Third, the PPP proposition for the Balkan economies is inspected using a new, updated data set covering the period from January 2006 to December 2023. Fourth, two numeraire currencies, the euro and the USD, are operated to assess the validity of exchange rate parity conditions. The econometric results provide resolute support for the PPP concept in the group of B5 countries.

• Details
• Contents