Validity test of purchasing power parity doctrine: An Indonesian case study

Sahabudin Sidiq, Herawati Herawati


The goal of this study is to analyze the doctrine purchasing power parity (PPP) in Indonesia with the case study of the rupiah exchange rate to U.S. dollar. The autoregressive is used to estimate the relationship between the change of exchange rate and the difference Indonesia–USA inflation rate. The data used in this study are quarterly data obtained from the International Financial Statistics (IFS) and Bank Indonesia (BI) with the period 1997Q4-2013Q4. The exchange rate that used in this study is using the rate on rupiah to U S dollar. The price data used consumer price index in Indonesia and the United States with a base year of 2000. The results of this study show, that rupiah to the U.S. dollar is undervalued during the free floating exchange rate system and, the PPP doctrine to the case of the rupiah to the U.S. dollar is not valid in the period of this study.


purchasing power parity, ex-change rate, undervalued

Full Text:


Article Metrics

Metrics Loading ...

Metrics powered by PLOS ALM

Creative Commons License
This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

Economic Journal of Emerging Markets (EJEM) is accredited by the Ministry of Research, Technology and Higher Education of the Republic of Indonesia (RISTEKDIKTI), No. 30/E/KPT/2018. It is currently indexed in:

Emerging Source Citation Index Clarivate AnalyticsREPEC (Econpapers)EBSCO, ProQuestDirectory of Open Access Journals (DOAJ)Cite FactorSinta (Science and Technology Index)IPI (Indonesian Publication Index)OCEC WorldCatHarvard LibraryThe Univesity of ManchesterUniversity of OxfordGoogle ScholarAsean Citation IndexDimensions - Digital Science

  Harvard Library   Google Scholar     Indonesian Publication Index (IPI)   WorldCat  Harvard Library  University of Oxford    

 Creative Commons License
Economic Journal of Emerging Markets by is licensed under a Creative Commons Attribution 4.0 International License.