DOLLAR STERLING EXCHANGE-RATE IN THE 1920S - PURCHASING POWER PARITY AND THE NORMAN CONQUEST OF 4.86-DOLLAR

The issue of long-run purchasing power parity for the US dollar-UK sterling exchange rate during the 1920s float is re-examined, and it is concluded that a form of long-run purchasing-power parity did in fact hold for dollar-sterling during this period. The new results are also employed to gauge the degree of overvaluation of sterling relative to the imposed pre-war parity of $4.86 on its return to gold in 1925 and for 12 months afterwards.