Testing the PPP for the Pound Sterling / US dollarWrite a two page paper, excluding charts and regression results, assessing the empirical support for PPP for the US Dollar – British pound: 1791-2015
Formulate a model that allows testing whether PPP holds
Estimate the parameters of that model using the files in the Data for Pound Sterling and PPP
Report
the test result for PPP the fit of the model
the assumed parameter constancy
the sensitivity to whether the variables are expressed in logs or not
you should have pcgive software, if you dont i have to send you, is a 300mb file
