Does the purchase power parity hold in the 21st century?

Exchange rate determination has always been an interesting yet controversial topic in macroeconomics. Developed by Gutav and Cassell in the early 20^th century, the purchasing power parity (PPP) is one of the most influential models of exchange rate determination over the past century. While the PPP gives a theoretical consistent explanation of exchange rate determination, empirical studies of the 20^th century tend to blatantly reject the theory of PPP (Meese and Rogoff, 1983; Froot and Rogoff, 1995; Pilbeam, 2006).