Mofid University The Journal of Economic Studies and Policies 2423-4648 0 11 2007 06 22 Testing the Purchasing Power Parity in Oil Exporting Countries Testing the Purchasing Power Parity in Oil Exporting Countries 43 60 47089 FA Mohsen Mehrara Assistant Professor, Faculty of Economics, University of Tehran Nosrat Abbaszadeh PhD student in Economics, University of Tehran Journal Article 2006 12 28 The Purchasing Power Parity theorizes a long-run relationship between prices and exchange rate in an open economy. The validity of this theory is dependent on the selected time period and the data frequency. This paper examines PPP hypothesis in the oil – exporting countries by using annual data (1965-2003). The thesis employs panel unit root technique to test whether the real exchange rates in the panel are mean reverting or not. The evidence shows that the null hypothesis of a unit root is rejected for the group of oil-exporting countries that have reliable data and relatively open economy. Indeed, Purchasing Power Parity is confirmed for the selected countries excluding Libya and Iran suffering official multiple exchange rates with associated exchange restrictions and import controls during sample period. The Purchasing Power Parity theorizes a long-run relationship between prices and exchange rate in an open economy. The validity of this theory is dependent on the selected time period and the data frequency. This paper examines PPP hypothesis in the oil – exporting countries by using annual data (1965-2003). The thesis employs panel unit root technique to test whether the real exchange rates in the panel are mean reverting or not. The evidence shows that the null hypothesis of a unit root is rejected for the group of oil-exporting countries that have reliable data and relatively open economy. Indeed, Purchasing Power Parity is confirmed for the selected countries excluding Libya and Iran suffering official multiple exchange rates with associated exchange restrictions and import controls during sample period. https://economic.mofidu.ac.ir/article_47089_d23f1d1cd4efe77dac5482f856a9d12d.pdf