Real exchange rate behavior in the Middle East: a re-examination

This letter extends recent work by Bahmani-Oskooee (Bahmani-Oskooee, M., Do exchange rates follow a random walk process in Middle Eastern countries? Economics Letters 1998;58:339–344) on testing long-run purchasing power parity for Middle Eastern countries during the post-Bretton Woods period. Using multivariate nonlinear models, strong support is provided for highly nonlinear reversion of real exchange rates toward a stable equilibrium for each country examined.