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Author Question: Explain briefly PPP and IRP. Why might the latter hold better than the former over time? What ... (Read 75 times)

sdfghj

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on: Jun 30, 2018
Explain briefly PPP and IRP. Why might the latter hold better than the former over time?
 
  What will be an ideal response?

Question 2

Explain why East Asian countries have done so well relative to South American countries.
 
  What will be an ideal response?


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tofugiraffe

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Reply #1 on: Jun 30, 2018
Answer to Question 1

IRP holds better because financial asset prices adjust faster to new information than goods prices.

Answer to Question 2

Mainly, the reasons are: less moral hazard, less government debt to foreigners and smaller budget deficits in East Asian countries.


sdfghj

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Reply 2 on: Jun 30, 2018
Gracias!

31809pancho

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Reply 3 on: Yesterday
Great answer, keep it coming :)

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