price of a book at Amazon.com from their sales sites in the US (www.amazon.com), U.K. (www.amazon.co.uk), and
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price of a book at Amazon.com from their sales sites in the US (www.amazon.com), U.K. (www.amazon.co.uk), and Germany (www.amazon.de). Alternatively, you can be creative and come up with your own test).
Use today's spot exchange rates of the US$ against the GBP and Euro and mention the spot rates that you have used in your answer.
(a) What are the predicted exchange rates from PPP?
(b) Compare the PPP rates with the spot rates. Does PPP hold? Which
currency is overvalued and by how much (Give answer in %)?
Hint: See Burgernomics discussion. Make sure you quote your PPP exchange rate and spot rate in the same way, i.e. direct or indirect.
Related Book For
International Marketing And Export Management
ISBN: 9781292016924
8th Edition
Authors: Gerald Albaum , Alexander Josiassen , Edwin Duerr
Posted Date: