Using apple product prices to evaluate the law of one price and product derived real exchange rates

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dc.contributor.advisorvan Lill, Dawiden_ZA
dc.contributor.advisorHollander, Hyltonen_ZA
dc.contributor.advisordu Rand, Gideonen_ZA
dc.contributor.authorWalker, Ernest Edwarden_ZA
dc.contributor.otherStellenbosch University. Faculty of Economic and Management Sciences. Dept. of Economics.en_ZA
dc.date.accessioned2023-11-29T00:07:21Z
dc.date.accessioned2024-01-08T11:02:51Z
dc.date.available2023-11-29T00:07:21Z
dc.date.available2024-01-08T11:02:51Z
dc.date.issued2023-12
dc.descriptionThesis (PhD)--Stellenbosch University, 2023. en_ZA
dc.description.abstractENGLISH SUMMARY: Empirical literature on the law of one price or purchasing power parity suggests that real exchange rate deviations are more persistent than economic theory would predict. To evaluate these deviations, I construct two novel panel datasets consisting of Apple product prices. The first dataset covers iPod, iPad, and iPhone prices across almost 50 countries spanning more than 10 years, and supports the hypothesis that the law of one price holds for some Apple products in both absolute and relative terms, particularly after controlling for transaction costs. This finding is attributable to the homogeneity of Apple products and the ease of accounting for transaction costs. The results suggest that Apple prices are better suited than often-used alternative price measures to investigate international parity conditions (e.g., the Big Mac Index and the consumer price index). The second panel dataset consists of weekly Apple iPad prices across 35 countries from 2016 through 2021. I use this dataset to evaluate the short-term, nonlinear adjustment behavior of real exchange rates with a range of nonlinear estimation techniques, including locally-weighted scatterplot smoothing, threshold regression models, and piecewise linear approaches. I find that the stochastic law of one price hypothesis is supported. Moreover, real exchange rate half-lives derived from Apple iPads are significantly shorter (estimated to be only a few weeks) than what is typically found in the literature for similar studies on the law of one price and purchasing power parity. Overall, my findings provide new insights into the dynamics of real exchange rates, highlighting the importance of using appropriate price measures and nonlinear estimation techniques.en_ZA
dc.description.abstractAFRIKAANSE OPSOMMING: Empiriese literatuur oor die wet van een prys of koopkragpariteit dui daarop dat reele wisselkoers afwykings meer volhardend is as wat die ekonomiese teorie voorspel. Om hierdie afwykings te evalueer, bou ek twee nuwe paneel datastelle saamgestel uit Apple-produkpryse. Die eerste datastel dek iPod-, iPad- en iPhone-pryse in byna 50 lande oor meer as 10 jaar, en ondersteun die hipotese dat die wet van een prys vir sommige Apple-produkte in beide absolute en relatiewe terme geldig is, veral nadat transaksiekostes in ag geneem is. Hierdie bevinding is te wyte aan die homogeniteit van Apple-produkte en die maklikheid om transaksiekostes in te reken. Die resultate dui daarop dat Apple-pryse beter geskik is as dikwels gebruikte alternatiewe prysmetings om internasionale prys en wisselkoers gelykheidstoestande te ondersoek (bv. die Big Mac-indeks en die verbruikersprysindeks). Ek bou ook ’n tweede paneel datastel saamgestel uit weeklikse Apple iPad-pryse in 35 lande vanaf 2016 tot 2021 om die korttermyn, nie-liniere aanpassingsgedrag van reele wisselkoerse te evalueer. Deur gebruik te maak van ’n reeks nie-liniere skattingstegnieke, insluitend LOWESS, drempelregressiemodelle en stuksgewyse lineere benaderings, bevind ek dat die stochastiese wet van een prys hipotese ondersteun word. Verder is die reele wisselkoers halflewe afgelei van Apple iPad tablette aansienlik korter (geskat op net ’n paar weke) as wat tipies in die literatuur gevind word vir soortgelyke studies oor die wet van een prys en koopkragpariteit. Oor die algemeen bied my bevindinge nuwe insigte in die dinamika van reele wisselkoerse en beklemtoon die belangrikheid van die gebruikaf_ZA
dc.description.versionDoctorate
dc.format.extentxiv, 154 pages : illustrations, includes annexures
dc.identifier.urihttps://scholar.sun.ac.za/handle/10019.1/128784
dc.language.isoen_ZAen_ZA
dc.publisherStellenbosch : Stellenbosch University
dc.rights.holderStellenbosch University
dc.subject.lcshConsumption (Economics) -- Pricesen_ZA
dc.subject.lcshPurchasing power parity -- Econometric modelsen_ZA
dc.subject.lcshForeign exchange ratesen_ZA
dc.subject.nameUCTD
dc.titleUsing apple product prices to evaluate the law of one price and product derived real exchange ratesen_ZA
dc.typeThesisen_ZA
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