Question: How is it possible for PPP to hold if the IFE does not? I. PPP may still hold even if investors across countries do not
How is it possible for PPP to hold if the IFE does not?
I. PPP may still hold even if investors across countries do not require the same real returns.
II PPP may still hold even if the expected inflation rate embedded in the nominal interest rate does not occur.
III. PPP may still hold even if the exchange rate does not adjust to the inflation rate differential.
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