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<p>We construct a novel dataset on Apple product prices to assess the adherence of different price measures to the law of one price (LOP) and purchasing power parity (PPP), along with their convergence properties following deviations. Using panel methods, with Bayesian estimates retained as supplementary robustness evidence, we evaluate overall conformity to LOP/PPP and then apply dynamic models to measure price and exchange rate convergence. We estimate the half-lives of deviations and quantify the adjustment process by examining how the adjustment parameters evolve over time. Our findings show that Apple products adhere more closely to LOP/PPP than traditional price measures, such as the Big Mac Index and the Consumer Price Index, with deviations lasting only a few months. Transaction costs are identified as a primary driver of persistent deviations from LOP, providing new empirical support for its theoretical predictions. These results highlight the advantages of using homogeneous, globally traded goods like Apple products in studying real exchange rate dynamics.</p>

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Using apple products to evaluate the law of one price and exchange rate passthrough

  • 期刊论文

  • 出版模式：

    开放获取

  • 发表日期：

    2026年7月11日

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  • R. Walker,
  • G. du Rand,
  • H. Hollander,
  • D. van Lill

摘要

We construct a novel dataset on Apple product prices to assess the adherence of different price measures to the law of one price (LOP) and purchasing power parity (PPP), along with their convergence properties following deviations. Using panel methods, with Bayesian estimates retained as supplementary robustness evidence, we evaluate overall conformity to LOP/PPP and then apply dynamic models to measure price and exchange rate convergence. We estimate the half-lives of deviations and quantify the adjustment process by examining how the adjustment parameters evolve over time. Our findings show that Apple products adhere more closely to LOP/PPP than traditional price measures, such as the Big Mac Index and the Consumer Price Index, with deviations lasting only a few months. Transaction costs are identified as a primary driver of persistent deviations from LOP, providing new empirical support for its theoretical predictions. These results highlight the advantages of using homogeneous, globally traded goods like Apple products in studying real exchange rate dynamics.