برابری قدرت خرید بیش از دو قرن: تقویت مورد ثبات نرخ ارز واقعی: پاسخی به گادینگتون و لیانگ

Cuddington and Liang (2000) [Purchasing Power parity over two centuries? Journal of International Money and Finance, 19, 751–755] examine the long span of sterling–dollar real exchange rate data of Lothian and Taylor (1996) [Real exchange rate behavior: the recent float from the perspective of the past two centuries. Journal of Political Economy, 104, 488–509] and claim to reject long-run purchasing power parity by fitting time trends or by considering very high-order autoregresssive representations. This reply demonstrates, however, that the central claims of Lothian and Taylor are in fact strengthened by the implications of Cuddington and Liang's analysis in that, while the economic importance of introducing trend terms is slight, this leads to a faster estimated speed of mean reversion.