Testing the Validity of Purchasing Power Parity For The Jordanian Economy

Abstract

This study aims to investigate the validity of the PPP hypothesis in Jordan over the periods (1980-2017), using the exchange rate for Jordanian dinar in terms of the US dollar. To carry out the objective of this study graphical approach, stationary test and Cointegration test are used. The empirical results of the these tests reject the PPP for Jordanian economy. These results affected by the trade obstacles, transaction costs and the price differences between countries.