From 1982 to 1988, a number of countries (e.g., Pakistan, Hungary, Venezuela) had a small or negative interest rate differential and a large average annual depreciation against the dollar. How would you explain these data? Can you reconcile these data with the international Fisher effect?
Answer to relevant QuestionsIn early 1989, Japanese interest rates were about 4 percentage points below U.S. rates. The wide difference between Japanese and U.S. interest rates prompted some U.S. real estate developers to borrow in yen to finance their ...In 1993 and early 1994, Turkish banks borrowed abroad at relatively low interest rates to fund their lending at home. The banks earned high profits because rampant inflation in Turkey forced up domestic interest rates. At ...Assume that the interest rate is 16% on pounds sterling and 7% on euros. At the same time, inflation is running at an annual rate of 3% in Germany and 9% in England.a. If the euro is selling at a one-year forward premium of ...a. As the value of the U.S. dollar rises, what is likely to happen to the U.S. balance on current account? Explain.b. What is likely to happen to the value of the dollar as the U.S. current-account deficit increases? ...During the year, Japan had a current-account surplus of $98 billion and a financial-account deficit, aside from the change in its foreign exchange reserves, of $67 billion.a. Assuming the preceding data are measured with ...
Post your question