The purpose of the study is to empirically determine the relevance of PPP theory under the traditional arbitrage and the efficient markets (EPPP) frameworks during the recent floating period of the 1980s. Monthly data was collected for fifteen industrial nations from January 1980 to December 1986. The models tested included the short-run PPP, the long-run PPP, the EPPP, the EPPP with deviations from expectations, the forward rates as unbiased estimators of future spot rates, the EPPP and the forward rates, and the EPPP with forward rates and lagged values. A generalized regression method called Seemingly Unrelated Regression (SUR) was employed to test the models. The results support the efficient markets approach to PPP but fail to support the traditional PPP in both the short term and the long term. Moreover, the forward rates are poor and biased predictors of the future spot rates. The random walk hypothesis is generally supported.

Photograph of the Sydney Botanical Gardens. Several large trees are visible on a manicured lawn and there is a pathway in the background.

Photograph of the Sydney Opera House. In the foreground, the harbor and several ships are visible; the buildings of Sydney, Australia are visible in the background behind the opera house.

Photograph of a powerhouse in Sydney, Australia. The photograph was taken looking down a long corridor. The corridor is lined with red doorways on the left side and white columns on the right. A figure is visible walking down the hallway in the center background.

Photograph of the Sydney Opera House in Sydney, Australia. In the foreground, one of the building's architectural shells is visible. Other shells are visible in the left foreground and background. The photograph was taken on the site of the opera house.

Photograph of the Sydney Opera House in Sydney, Australia. The side of one architectural shell intersects the top right foreground. The side view of a shell with glass entryway is visible in foreground. A male figure stands in front of the glass entrance. In the background, a metal railing and a bridge are visible.

Photograph of the Sydney Opera House in Sydney, Australia. Part of the harbour is visible in the foreground. The exterior of the opera house is in full view with land and clouds in the background.

Letter from Clayton B. Williams discussing an encounter he had with a former WASP before going on a cruise and asking if anyone had a list of individuals that came to a recent reunion so that he could get her address.

Article describing a near-death experience that is of interest because it began to unfold as a positive experience but then changed course to become a negatively toned one. The article presents the details of the case and notes its principal theoretical implications.