Price and exchange rate determination between the Mekong River economies of Cambodia and Thailand

Roselyne Joyeux, William E. Worner

Research output: Contribution to journalArticle

3 Citations (Scopus)

Abstract

The authors use cointegration techniques to test for: i) purchasing power parity (PPP) on the bilateral exchange rate between Cambodia and Thiland; and ii) the existence of a long-run equilibrium relationship between the official and parallel market exchange rates. The period under study is the phase of economic transition in Cambodia from central planning to a market economy during which inflation accelerated and then decelerated. The findings for the first test support the relative version of the PPP hypothesis. The second test draws on portfolio balance theory in the context of a dual exchange rate system. The findings indicate that parallel and offical exchange rates are cointegrated, implying that during the period of monetary adjustment official and parallel market exchange rates depreciated in the same proportion over the long run.

Original languageEnglish
Pages (from-to)424-445
Number of pages22
JournalJournal of the Asia Pacific Economy
Volume3
Issue number3
Publication statusPublished - 1998

Fingerprint Dive into the research topics of 'Price and exchange rate determination between the Mekong River economies of Cambodia and Thailand'. Together they form a unique fingerprint.

Cite this