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Long Swings In The Exchange Rate And The Excess

Long Swings In The Exchange Rate And The Excess Returns Puzzle: The Ro

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Title: Long Swings In The Exchange Rate And The Excess Returns Puzzle: The Ro

Essay Details:

Subject: Miscellaneous

Author: Erika K

Date: June 14, 2016

Level: University

Grade: A

Length: 2 / 489

Essay text:

The uncertainty of a switch occurring in a regime (the Peso Problem) is an interest-ing form within which to embed the imperfect information. It is a format that seems ready to ex-pand into many other areas of economic modeling in which expectations are at the core of the model's dynamics. Of course, the choice of the benchmark is key to the mechanics of the process. In this case, PPP is an obvious choice? but, since the idea of PPP drives this model so strongly, it is interesting to look at its place and its characteristics. In the paper, the authors note that if PPP holds, "relative excess demand for domestic and foreign goods is zero...

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