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Recommended readings (Machine generated): Gustav Cassel (1916), 'The Present Situation of The Foreign Exchanges', Economic Journal, XXVI (101), March, 62-5 -- Gustav Cassel (1920), 'Further Observations on the World's Monetary Problem', Economic Journal, XXX (117), March, 39-45 -- Yihui Lan (2002), 'The Explosion of Purchasing Power Parity', in Meher Manzur (ed) (ed.), Exchange Rates, Interest Rates and Commodity Prices, Chapter 2, Cheltenham, UK: Edward Elgar, 9-38 -- Bela Balassa (1964), 'The Purchasing-Power Parity Doctrine: A Reappraisal', Journal of Political Economy, 72, 584-96 -- Paul A. Samuelson (1964), 'Theoretical Notes on Trade Problems', Review of Economics and Statistics, 46, 145-54 -- Peter Isard (1977), 'How Far Can We Push the "Law of One Price"?', American Economic Review, 67 (5), December, 942-8 -- Jacob A. Frenkel (1978), 'Purchasing Power Parity: Doctrinal Perspective and Evidence from the 1920s', Journal of International Economics, 8 (2), May, 169-91 -- Michael Adler and Bruce Lehmann (1983), 'Deviations from Purchasing Power Parity in the Long Run', Journal of Finance, XXXVIII (5), December, 1471-87 -- Dean Corbae and Sam Ouliaris (1988), 'Cointegration and Tests of Purchasing Power Parity', Review of Economics and Statistics, 70, 508-11 -- Craig S. Hakkio (1984), 'A Re-examination of Purchasing Power Parity: A Multi-Country and Multi-Period Study', Journal of International Economics, 17, 265-77 -- Niso Abuaf and Philippe Jorion (1990), 'Purchasing Power Parity in the Long Run', Journal of Finance, XLV (1), March, 157-74 -- Meher Manzur (1990), 'An International Comparison of Prices and Exchange Rates: A New Test of Purchasing Power Parity', Journal of International Money and Finance, 9 (1), March, 75-91 -- James R. Lothian and Mark P. Taylor (1996), 'Real Exchange Rate Behavior: The Recent Float from the Perspective of the Past Two Centuries', Journal of Political Economy, 104 (3), 488-509 -- Jeffrey A. Frankel and Andrew K. Rose (1996), 'A Panel Project on Purchasing Power Parity: Mean Reversion Within and Between Countries', Journal of International Economics, 40 (1-2), 209-24 -- Panos Michael, A. Robert Nobay and David A. Peel (1997), 'Transactions Costs and Nonlinear Adjustment in Real Exchange Rates: An Empirical Investigation', Journal of Political Economy, 105 (4), 862-79 -- Mark P. Taylor and Lucio Sarno (1998), 'The Behavior of Real Exchange Rates during the Post-Bretton Woods Period', Journal of International Economics, 46, 281-312 -- Charles Engel (2000), 'Long-Run PPP May Not Hold After All', Journal of International Economics, 57, 243-73 -- Li Lian Ong (1997), 'Burgernomics: The Economics of the Big Mac Standard', Journal of International Money and Finance, 16 (6), 865-78 -- Kenneth Rogoff (1996), 'The Purchasing Power Parity Puzzle', Journal of Economic Literature, XXXIV, June, 647-68

WOS: 000367381100004 ; This article examines the validity of purchasing power parity hypothesis for Azerbaijan. Econometric investigation uses linear and nonlinear unit root tests and are based on the time series characteristics of the real exchange rate of Azerbaijan's manat versus the national currencies of its major trading partners; USA, European Union, Russia and Turkey. Findings support the validity of the purchasing power parity hypothesis between Azerbaijan and its market economy dominated trading partners, but not support between Azerbaijan and its former centrally controlled partner.

PurposeThe purpose of this paper is to revisit the evidence for purchasing power parity (PPP) using long, low‐frequency data (over 100 years) for 23 organization for economic co‐operation and development (OECD) countries against each of four different base currencies – the Deutsch mark, the Japanese yen, the British pound, and the US dollar.Design/methodology/approachThe paper uses standard unit root tests and level and trend stationarity tests, and also investigates the robustness of the results to alternative testing methodologies from statistical physics, such as Lo's modified rescaled range statistic and the Hurst exponent.FindingsThe results indicate that the theory of PPP does not hold.Originality/valueMotivated by the mixed results from previous research on the validity of the theory of PPP, the robustness of standard unit root and stationarity tests to alternative testing methodologies are investigated. In particular, the paper uses two tests from statistical physics – Lo's modified R/S statistic and the Hurst exponent.

Noting that important discoveries linger in the classrooms despite effective specification and empirical support, a bridge from theory to policy is advocated. Policy prescriptions should be made cautiously, but they must be made when failure to disclose scientific findings has serious downside implications. The power transition research project pioneered by AFK Organski is used as an illustration because this perspective systematically and accurately accounts for changes in world politics both before and after the collapse of the Soviet Union*. The unorthodox policy prescription is that to assure a peaceful transition, the United States must be proactive in setting the status quo conditions prior to the anticipated overtaking by China. Once this obstacle is passed, a long period of global peace should ensue. The specific policies that advance peace include (1) Expand NATO to include Eastern Europe, then Russia to postpone an overtaking by China, or more boldly expand NATO to include China to remove incentives for global war. (2) Restructure the Security Council to reflect the changing power hierarchy and increase its capacity to defuse regional conflicts and limit escalation. (4) Maintain nuclear asymmetry and minimizing nuclear proliferation to minimize the danger of a global and regional nuclear war. (5) Recognize that despite efforts by the United States, regional powerovertaking will continue to generating the necessary structural conditions for serious conflict. In sum, taking advantage of its power preponderance the United States can by timely policy interventions minimize regional instability and solidify the tenuous global stability we now enjoy.