Empirical testing of PPP PPP not proved to be accurate in predicting future exchange rates. Two general conclusions can be made from these tests: PPP holds up well over the very long run but poorly for shorter time periods;and, 留 the theory holds better for countries with relatively high rates of inflation and underdeveloped capital markets.Empirical testing of PPP PPP not proved to be accurate in predicting future exchange rates. Two general conclusions can be made from these tests: PPP holds up well over the very long run but poorly for shorter time periods; and, the theory holds better for countries with relatively high rates of inflation and underdeveloped capital markets