Validity of PPP for Producer Meat Prices in EU; Some Evidence

Market integration and the introduction of single currency has arisen the issue of the validity of the Purchasing Power Parity (PPP) hypothesis in EU within the last few decades. In most cases the surveys involve consumer prices and in particular the consumer price indices for the whole economy. Though, a few surveys focus on commodity prices and even less to producer prices. The present survey makes an effort to examine the behaviour of the real exchange rates based on producer meat prices for different EU countries. The role of CAP seems to be pivotal in our results, since no methodology employed could confirm stationarity and consequently, a mean reverting behaviour to a steady state for our data.