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parott

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tT
发表于 2011-7-13 16:24 | 只看该作者

purchase power partity

solved, question, purchase, one, power
can purchase power partity be S * ( 1+ Inflation on F)/ ( 1+Inflation on D )
one question solved based on the above, when to use it like this ???

 

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19831985

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2#
发表于 2011-7-13 16:24 | 只看该作者
The way I solve it is



$/Pound = $ is domestic Pound is foreign


$/pound = spot x (1+inflation $)/(1+inflation pound)


The only time i use foreign in the numerator is when calculating real exchange rate (i.e using Price Levels)

I hope this helps.

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