Purchasing power parity across states and goods within Australia

Kausik Chaudhuri, Jeffrey Sheen*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

6 Citations (Scopus)


Panel unit root tests show that intranational purchasing power parity cannot be rejected across major Australian cities from 1972:3 to 1999:1. The persistence of deviations in response to shocks is low, as measured by the estimated exact half-life of between five and ten quarters. This is much lower than results for similar tests done on US cities, and for international purchasing power parity tests. The food CPI is largely responsible for the fast convergent results for city CPIs. Intranational purchasing power parity was rejected for the floating exchange rate period from 1984 to 1991 when inflation was high and not specifically targeted by the central bank.

Original languageEnglish
Pages (from-to)314-329
Number of pages16
JournalEconomic Record
Issue number250
Publication statusPublished - Sep 2004
Externally publishedYes


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