Real national price levels: an empirical reassessment

The association between the national price level (PL) and nontradables price (P) can be used to derive various purchasing power parity (PPP) indices. PPP is defined as an index of the prices of exportables, importables and nontraded goods. It was posited that a methodology using simultaneous equations computing for the relative prices of nontradables will result in a dependent variable which will provide an alternative econometric analysis of PL.