文摘
This dissertation empirically investigates whether Inflation Targeting (IT) monetary policies are related to the validity of Purchasing Power Parity (PPP) and Real Interest Rate Parity (RIP). Based on previous studies,PPP and RIP are considered to be contingent upon several issues including choices of price indices and base currencies as well as cross-sectional dependence assumption. This study further examines whether those issues are still important under the effects of IT. By using IPS and CIPS unit root tests with different base currencies and two price indices,the strong supportive evidence can be found in IT countries and it turns out that IT outweighs other issues when it comes to PPP and RIP.