TESTING THE VALIDITY OF THE PURCHASING POWER PARITY (PPP) HYPOTHESIS FOR TÜRKİYE: LINEAR AND NONLINEAR UNIT ROOT TESTS.

In this paper, we test the validity of the purchasing power parity (PPP) hypothesis between Türkiye and its trading partners - the European Union, China, and the US - for the period from January 2001 to January 2020. We test the stationarity of the real exchange rates for the validity of the PPP hypothesis by applying linear and nonlinear unit root tests. We also employ Fourier-based tests to account for the structural changes that occurred in the considered period. Test results indicate that shocks are temporary, and the PPP hypothesis is valid for Türkiye. [ABSTRACT FROM AUTHOR]