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The excel file TD7_PPP provides Consumer Price Indices and Nominal Exchange Rates with the US$ for 23 industrialized countries in 1973 and 1993. Nominal exchange
The excel file TD7_PPP provides Consumer Price Indices and Nominal Exchange Rates with the US\$ for 23 industrialized countries in 1973 and 1993. Nominal exchange rates are expressed in terms of the currency of the country per US\$. Compare the rate of depreciation of a given currency and the inflation differential relative to the US over the period. [hint: do a scatter plot with the rate of depreciation on the y-axis and the inflation differential on the x-axis or alternatively perform a regression of the rate of depreciation on the inflation differential.]
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