below

Q1- does purchasing power parity hold for the Turkish lira-U.S. dollar exchange rate?

Q2- Regress the rate of exchange rate changes (percentage change in the exchange rate) on the inflation rate differential to estimate the intercept and the slope coefficient, and interpret the regression results? (are the results support or are inconsistent with PPP theory ?

Q3- Discuss the relation between the percentage change in the exchange rate and the inflation differential?

Answer above question according to the below data

	Annual inflation rate (%) - Turkey	Annual inflation rate (%) - United States	exchange rate - direct quote ($/Lira) - end of year (Jan of following year)
1990			0.00033723067
1991	66.00%	4.20%	0.00018956645
1992	70.10%	3.00%	0.00011571075
1993	66.10%	3.00%	0.00006516063
1994	105.20%	2.60%	0.00002481641
1995	89.10%	2.80%	0.00001651138
1996	80.40%	2.90%	0.00000889451
1997	85.70%	2.30%	0.00000470877
1998	84.60%	1.50%	0.00000309534
1999	64.90%	2.20%	0.00000183056
2000	54.90%	3.40%	0.00000148858
2001	54.40%	2.80%	0.00000073065
2002	45.00%	1.60%	0.00000060043
2003	30.30%	2.40%	0.00000074237

Q4- If there is a negative 1% inflation differential, what is the predicted percentage change in the exchange rate?