The Purchasing Power Parity: Theory and Evidence

This paper is focused on the theory of purchasing power parity and presents its special place in the world of economic thought. Particular attention was paid to the possible reasons for deviations from the relationship determined by the parity and to the theoretical explanation of this phenomenon. The formal empirical verification is based on econometric tools that allow the study of the phenomenon of the co-integration of rates as well as of prices and the stationarity of real exchange rates. The survey was conducted on the basis of quarterly data taken from the ¿OECD Statistical Compendium 2009¿ database for the years 1970-2009. The considerations of the issue end with the interpretation of the research outcome in the context of analyses published in the world literature.