Abstract
International finance often focuses on parity conditions linking financial or goods markets in different countries. The integration between financial markets is often measured by deviations from uncovered interest parity (UIP) as in Cumby and Obstfeld (1984) and Frankel and MacArthur (1988). Similarly, the integration between goods markets is often measured by deviations from purchasing power parity as in Roll (1979) and Adler and Lehmann (1983). This study presents new evidence on both sets of parity conditions using a monthly data set spanning over twenty-five years. This data set is also used to interpret ‘real interest parity’ (RIP), another form of interest parity often cited as evidence of financial market integration.
Special thanks are due to Albert Jaeger for helpful comments on an earlier draft.
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References
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© 1993 International Economic Association
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Marston, R.C. (1993). Three Parity Conditions in International Finance. In: Frisch, H., Wörgötter, A. (eds) Open-Economy Macroeconomics. International Economic Association Series. Palgrave Macmillan, London. https://doi.org/10.1007/978-1-349-12884-6_14
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DOI: https://doi.org/10.1007/978-1-349-12884-6_14
Publisher Name: Palgrave Macmillan, London
Print ISBN: 978-1-349-12886-0
Online ISBN: 978-1-349-12884-6
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