Abstract
ABSTRACT The aim of this paper is to test the purchasing power parity theory for the exchange rates between the peseta and both the French franc and the pound sterling for the period 1868–1914. The stationarity of the real exchange rate is tested using linear and non-linear unit root tests and wholesale and consumer price series. The results show that possible short-term deviations in the real exchange rate series are corrected in the long term, so the purchasing power parity theory holds.
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