Cunha, Luís Campos eMachado, José António Ferreira2019-10-312019-10-311993-12Cunha, Luís Campos e and Machado, José António Ferreira, A PPP Model of Real Appreciation (December, 1993). FEUNL Working Paper Series No. 210http://hdl.handle.net/10362/85982This paper presents a model of the real exchange rate. In the vein of Balassa (1964) it is shown how PPP can be reconciled with permanent differences in costs of living across countries and across regions inside the same country. This is true for the relative version of PPP, as well as, for the absolute version. Policy recommendations are underlined. At last, an empirical test is suggested.engworking paper