Purchasing Power Parity Its Theoretical Perspective And Empirical Evidence
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Purchasing Power Parity Its Theoretical Perspective And Empirical Evidence
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Author : Marc Munzer
language : en
Publisher: GRIN Verlag
Release Date : 2009-08-19
Purchasing Power Parity Its Theoretical Perspective And Empirical Evidence written by Marc Munzer and has been published by GRIN Verlag this book supported file pdf, txt, epub, kindle and other format this book has been release on 2009-08-19 with Business & Economics categories.
Seminar paper from the year 2009 in the subject Business economics - Investment and Finance, grade: 1,3, University of Hull, language: English, abstract: The Swedish economist Gustav Cassel developed his theory of Purchasing Power Parity (henceforth PPP) more than 80 years. Ago, and today it is still an essential part of the framework for forecasting exchange rates, which includes parity conditions in international finance. International parity conditions imply purchasing power parity, the Fisher effect, the interest rate parity theory and the expectations theory. “They are the set of equilibrium relationships which should hold between product prices, interest rates, and spot and forward exchange rates assuming a freely floating exchange system.” (Demirag and Goddard, 1994, 70) Unfortunately, these theories do not always work out in reality, especially in times of financial crisis. However, they give us a central understanding of how and why multinational business is related in the world. Sometimes, “the mistake is not always in the theory itself, but in the way it is interpreted or applied in practice” (Eitemann et.al., 2004, 133). This essay will take a detailed look at PPP, its theoretical perspective, and the empirical evidence for it. [...]
The Principle Practise And Problems Of Purchasing Power Parity Theory
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Author : Alina Ignatiuk
language : en
Publisher: GRIN Verlag
Release Date : 2009-04
The Principle Practise And Problems Of Purchasing Power Parity Theory written by Alina Ignatiuk and has been published by GRIN Verlag this book supported file pdf, txt, epub, kindle and other format this book has been release on 2009-04 with Purchasing power parity categories.
Seminar paper from the year 2008 in the subject Business economics - Miscellaneous, grade: A, Schmalkalden University of Applied Sciences (Schmalkalden University), language: English, abstract: "Under the skin of any international economist lies a deep-seated belief in some variant of the PPP theory of the exchange rate." The purpose of this paper is to consider one of the most controversial theory in international economics - Purchasing Power Parity theory - its main idea, empirical evidence, limitations and practical application. The main idea of PPP is price levels changes determine the exchange rate change between two countries. There are two versions of PPP theory absolute and relative. Stricter absolute version of PPP did not find confirmation in reality and relative version of PPP theory was proposed. Despite theoretical and practical inconformity, PPP is present in many models of international economics as an explanation of exchange rate changes. The main apologist of PPP theory and its father was Gustav Cassel. He indicated that the exchange rate determined by price levels is not necessarily the actual exchange rate but the equilibrium one. Also Cassel mentioned that there is a tendency for the actual exchange rate to return to its equilibrium exchange rate. The original idea of PPP theory is described below: "Our willingness to pay a certain price for foreign money must ultimately and essentially be due to the fact that this money possesses a purchasing power as against commodities and services in that foreign country." In this paper we considered the principle and two versions of PPP theory, discussed its empirical evidence and econometrical tests, and also tried to find possible reasons why PPP theory fails in reality and answered the question is this theory still useful for explaining exchange rates movements.
International Parity Conditions
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Author : Razzaque H. Bhatti
language : en
Publisher: Springer
Release Date : 2016-07-27
International Parity Conditions written by Razzaque H. Bhatti and has been published by Springer this book supported file pdf, txt, epub, kindle and other format this book has been release on 2016-07-27 with Business & Economics categories.
This book presents an extensive survey of the theory and empirics of international parity conditions which are critical to our understanding of the linkages between world markets and the movement of interest and exchange rates across countries. The book falls into three parts dealing with the theory, methods of econometric testing and existing empirical evidence. Although it is intended to provide a consensus view on the subject, the authors also make some controversial propositions, particularly on the purchasing power parity conditions.
Purchasing Power Parity And Exchange Rates
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Author : Lawrence H. Officer
language : en
Publisher: Greenwich, Conn. : JAI Press
Release Date : 1982
Purchasing Power Parity And Exchange Rates written by Lawrence H. Officer and has been published by Greenwich, Conn. : JAI Press this book supported file pdf, txt, epub, kindle and other format this book has been release on 1982 with Business & Economics categories.
Evolution of PPP theory; Modern PPP theory and practice; Selected PPP studies.
Imf Staff Papers
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Author : International Monetary Fund. Research Dept.
language : en
Publisher: International Monetary Fund
Release Date : 1976-01-01
Imf Staff Papers written by International Monetary Fund. Research Dept. and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 1976-01-01 with Business & Economics categories.
This chapter presents a review article on the purchasing power parity (PPP) theory of exchange rates. The PPP theory involves the ratio of two countries' price levels or price indices times a base period exchange rate as the most important variable determining the exchange rate, but it allows both for other explanatory variables and for random influences. Criticisms of PPP include the existence of tariffs and transport costs, the role of income in exchange rate determination, and the existence of noncurrent account items in the balance of payments. The direction of causality (prices to exchange rates) has also been called into question. Several kinds of tests of the PPP theory have appeared in the empirical literature. One test demonstrates that the ratio of PPP to the exchange rate is systematically related to differences in per capita income across countries. Other tests correlate time series of PPP and the exchange rate or perform a comparative-static comparison of the two variables over time.
Purchasing Power Parity
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Author : María Pérez Jurado
language : en
Publisher:
Release Date : 1993
Purchasing Power Parity written by María Pérez Jurado and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 1993 with Purchasing power parity categories.
The Principle Practise And Problems Of Purchasing Power Parity Theory
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Author : Alina Ignatiuk
language : en
Publisher: GRIN Verlag
Release Date : 2009-04-09
The Principle Practise And Problems Of Purchasing Power Parity Theory written by Alina Ignatiuk and has been published by GRIN Verlag this book supported file pdf, txt, epub, kindle and other format this book has been release on 2009-04-09 with Business & Economics categories.
Seminar paper from the year 2008 in the subject Business economics - Miscellaneous, grade: A, Schmalkalden University of Applied Sciences (Schmalkalden University), language: English, abstract: "Under the skin of any international economist lies a deep-seated belief in some variant of the PPP theory of the exchange rate." The purpose of this paper is to consider one of the most controversial theory in international economics – Purchasing Power Parity theory – its main idea, empirical evidence, limitations and practical application. The main idea of PPP is price levels changes determine the exchange rate change between two countries. There are two versions of PPP theory absolute and relative. Stricter absolute version of PPP did not find confirmation in reality and relative version of PPP theory was proposed. Despite theoretical and practical inconformity, PPP is present in many models of international economics as an explanation of exchange rate changes. The main apologist of PPP theory and its father was Gustav Cassel. He indicated that the exchange rate determined by price levels is not necessarily the actual exchange rate but the equilibrium one. Also Cassel mentioned that there is a tendency for the actual exchange rate to return to its equilibrium exchange rate. The original idea of PPP theory is described below: “Our willingness to pay a certain price for foreign money must ultimately and essentially be due to the fact that this money possesses a purchasing power as against commodities and services in that foreign country.” In this paper we considered the principle and two versions of PPP theory, discussed its empirical evidence and econometrical tests, and also tried to find possible reasons why PPP theory fails in reality and answered the question is this theory still useful for explaining exchange rates movements.
International Corporate Finance
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Author : Laurent L. Jacque
language : en
Publisher: John Wiley & Sons
Release Date : 2019-10-29
International Corporate Finance written by Laurent L. Jacque and has been published by John Wiley & Sons this book supported file pdf, txt, epub, kindle and other format this book has been release on 2019-10-29 with Business & Economics categories.
As globalization is redefining the field of corporate finance, international finance is now part and parcel of the basic literacy of any financial executive. This is why International Corporate Finance is a “must” text for upper-undergraduates, MBAs aspiring to careers in global financial services and budding finance professionals. International Corporate Finance offers thorough coverage of the international monetary system, international financing, foreign exchange risk management and cross-border valuation. Additionally, the book offers keen insight on how disintermediation, deregulation and securitization are re-shaping global capital markets. What is different about International Corporate Finance? Each chapter opens with a real-life mini-case to anchor theoretical concepts to managerial situations. Provides simple decision rules and “how to do” answers to key managerial issues. Cross-border Mergers & Acquisitions, Project Finance, Islamic Finance, Asian Banking & Finance are completely new chapters that no other textbooks currently cover. Accompanied with a comprehensive instructor support package which includes case studies, an Instructor’s Manual, PowerPoint slides, Multiple Choice Questions and more.
Purchasing Power Parity And Real Exchange Rates
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Author : Mark P. Taylor
language : en
Publisher: Routledge
Release Date : 2013-09-13
Purchasing Power Parity And Real Exchange Rates written by Mark P. Taylor and has been published by Routledge this book supported file pdf, txt, epub, kindle and other format this book has been release on 2013-09-13 with Business & Economics categories.
The term Purchasing Power Parity may date from the early twentieth century, when it was coined by the Swedish economist Gustav Cassel, but the underlying concept had been enjoying varying degrees of success since its development in sixteenth century Spain. Even towards the end of the twentieth century, and especially since the breakdown of the Bretton Woods system of fixed exchange rates, PPP and the stability of real exchange rates continued to be the subject of academic debate. This volume brings together essays covering aspects of current thinking on Purchasing Power Parity, from the various ways in which to test for its existence, to its appearance in different economies around the world, to examinations of the explanations given when PPP does not appear to hold This book was published as a special issue of Applied Financial Economics. The academic editor of this journal is Mark P. Taylor.
Reader S Guide To The Social Sciences
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Author : Jonathan Michie
language : en
Publisher: Routledge
Release Date : 2014-02-03
Reader S Guide To The Social Sciences written by Jonathan Michie and has been published by Routledge this book supported file pdf, txt, epub, kindle and other format this book has been release on 2014-02-03 with Social Science categories.
This 2-volume work includes approximately 1,200 entries in A-Z order, critically reviewing the literature on specific topics from abortion to world systems theory. In addition, nine major entries cover each of the major disciplines (political economy; management and business; human geography; politics; sociology; law; psychology; organizational behavior) and the history and development of the social sciences in a broader sense.