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Journal of Economic Integration 1998 September;13(3) :499-521.
DOI: https://doi.org/10.11130/jei.1998.13.3.499
The Factor Specificity and the Exchange Rate Theory of Purchasing Power Parity: An Extension of the Jones-Purvis Model
Juan Antonio García-Cebro 
University of A Coruña
Copyright ©1998 Journal of Economic Integration
ABSTRACT
The focus of this paper is on the structural aspects of exchange rate determination, generalizing the 1983 Jones-Purvis model. Specifically the Jones-Purvis model is extend to incorporate the concept of factor specificity. It is shown that deviations from purchasing power parity depend on, among other determinants, factor specificity. Furthermore, it examines the factor specificity as a short-medium run determinant of the behavior of exchange rates, in a frame work where two countries are affected by a common external shock. (JEL clas sification: F11, F31)
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