Question
Suppose you have lending interest rate data and exchange rate data for periods t through period t + h. In period t, a lender starts
Suppose you have lending interest rate data and exchange rate data for periods t through period t + h. In period t, a lender starts with one unit of the currency. He or she lends it out during that period and receives the principal plus interest at the beginning of the next period. Graph how the value of the investment evolves over time as both the principal and interest accrues from time t to time h-1.
I have chosen Japan, you will need following data:
Using website https://fred.stlouisfed.org/
1. 3-Month or 90-day Rates and Yields: Interbank Rates for each of the three countries you have chosen (monthly data).
2. 3-Month or 90-day Rates and Yields: Interbank Rates for the United States (monthly data).
3. Consumer Price Index: Total All Items for each of the three countries you have chosen (monthly data).
4. Consumer Price Index: Total All Items for the United States (monthly data).
5. Exchange Rate to US Dollar (or National Currency Units per US Dollar) for each of the three countries you have chosen (monthly data).
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