Over the last months, inflation has been a major problem for central bankers worldwide. The July 2022
Question:
Over the last months, inflation has been a major problem for central bankers worldwide. The July 2022 inflation rate in the UK was higher than in any other G7 country, reaching 10.1 percent.
a) Based on the above information, ceteris paribus, how would you expect the British pound to have performed versus the currencies of the G7 countries in July?
b) Get the actual July 2022 inflation rates for the US and the Euro Area and, based on your understanding of the purchasing power parity, calculate what should have been the pound's value against the US dollar and the euro at the end of July.
c) How does your calculation in b) compare to actual exchange rates at the end of July? Does the PPP hold?
International Marketing And Export Management
ISBN: 9781292016924
8th Edition
Authors: Gerald Albaum , Alexander Josiassen , Edwin Duerr