Turkish Lira And The Purchasing Power Parity

Turkish Lira and the Purchasing Power Parity

Veritas Emerging grocery store Fund specializes in investing in emerging pullulate markets of the world. Mr.
Henry Mobaus, an experienced hand in international enthronization and your boss, is currently interested in
Turkish stock markets. He thinks that jokester will eventually be invited to negotiate its membership in the
European Union. If this happens, it will boost the stock prices in bomb calorimeter. But, at the same time, he is quite
concerned with the volatile vary rank of the Turkish currency. He would equal to understand what
drives the Turkish exchange charge per units. Since the swelling rate is much higher in Turkey than in the U.S., he
thinks that the purchasing power parity may be feeding at least to some extent. As a research assistant for
him, you were assigned to check this out. In other words, you have to study and prepare a report on the
following question: Does the purchasing power parity hold for the Turkish lira-U.S. dollar exchange rate?
Among other things, Mr. Mobaus would like you to do the following:

a. Plot the past exchange rate changes against the differential inflation rates between
Turkey and the U.S. for the last quadruplet years.

b.



Regress the rate of exchange rate changes on the inflation rate differential to estimate
the intercept and the slope coefficient, and interpret the retrogression results.

Answer :
a.
Date| (exchange rates) TRY/USD| inf U.S| Inf Turkey| inf turkey - inf U.S|
Jan-08| 1.1756| 0.4970576| 0.8026343| 0.3055767|
Feb-08| 1.1959| 0.2904112| 1.293045| 1.0026338|
Mar-08| 1.2465| 0.8668213| 0.9607632| 0.0939419|
Apr-08| 1.2993| 0.6064779| 1.676981| 1.0705031|
May-08| 1.2475| 0.8420886| 1.492244| 0.6501554|
Jun-08| 1.2352| 1.0077| -0.3611272| -1.3688272|
Jul-08| 1.2099| 0.5251011| 0.5760145| 0.0509134|
Aug-08| 1.1817| -0.3991562| -0.2445302| 0.154626|
Sep-08| 1.244| -0.1383018| 0.4515546| 0.5898564|
Oct-08| 1.486|...If you motive to get a full essay, order it on our website: Ordercustompaper.com



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