Between 2002 and 2004, when the 1-year interest rate in the euro zone was 120 basis points
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Between 2002 and 2004, when the 1-year interest rate in the euro zone was 120 basis points higher than the U.S. rate, on an average, economists expected a depreciation of the euro based on the interest parity; however, it appreciated by 46 percent against the U.S. How would you explain this deviation from the interest parity?
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Related Book For
International Economics Theory And Policy
ISBN: 9781292409719
12th Edition
Authors: Paul Krugman , Maurice Obstfeld, Marc Melitz
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