NSU Research Contributions
Title : Smuggling as Another Cause of Failure of the PPP
Authors : Mohsen Bahmani-Oskooee, Gour Goswami
| Journal Title: Journal of Economic Development | Volume Number: 28 | Publication Year : 2003 | Issue Number: 2 |
| Index: scopus | Ranking: Q4 | ISSN: 02548372 | Publisher Name: Economic Research Institute of Chung-Ang University |
| Pages : 23-38 | |||
| Funding Source : None |
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Direct Sustainable Development Goals : SDG8 Decent Work & Economic Growth SDG9 Industry, Innovation & Infrastructure |
Indirect Sustainable Development Goals : SDG8 Decent Work & Economic Growth SDG9 Industry, Innovation & Infrastructure |
Sustainable Development Sub Goals : Sustain per capita economic growth Increase trade support for least developed countries Promote inclusive and sustainable industrialization |
| Impact statement: In theoretical literature, smuggling is considered a factor contributing to the deviation of the PPP-based exchange rates from the equilibrium exchange rates with little empirical support. In this paper, we used panel data for 33 developing countries over the period 1982-1995, and used the panel unit root and panel cointegration technique along with pooled OLS, fixed effects, random effects, and the Parks estimator in an augmented Balassa-Samuelson framework. Using two different proxies for smuggling, it is found that smuggling into a country leads to an appreciation of domestic currency, which can be considered as another cause of losing competitiveness by many developing countries. | Collaboration: Partner University | Keywords: Smuggling, PPP, Real Exchange Rate, Panel Data, Panel Unit Root, Panel Cointegration, LDCs |
