Foreign exchange and global finance-purchasing power

Reference no: EM1345610

Describe the theoretical perspectives of PPP and empirical evidence in testing PPP.

To what extenet PPP may or may not hold in the real world? To what extent does it hold in the real world?

Please provide various of factors that contribute to the departure from PPP.

For relative PPP, you may collect the price indexes in two countries, or the price index in one country and the price indexes in several other countries, and the pertinent exchange rates. Examine changes in price indexes and exchange rates.

For absolute PPP, you may consider a particular commodity/ product (or several) in your study, between two countries or one country against several countries. Collect relevant data and examine them.

It will also be helpful to assist me on summarizing, discussing and concluding the data.

Reference no: EM1345610

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