6. Describe how each of the following factors might explain why PPP is a better guide for...

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6. Describe how each of the following factors might explain why PPP is a better guide for exchange rate movements in the long run versus the short run: (i) transactions costs, (ii) nontraded goods, (iii) imperfect competition, (iv) price stickiness. As markets become increasingly integrated, do you suspect PPP will become a more useful guide in the future? Why or why not?

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International Macroeconomics

ISBN: 9781319061722

4th Edition

Authors: Robert C Feenstra ,Alan M Taylor

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