| Author | : International Monetary Fund |
| File Size | : 46,7 Mb |
| Publisher | : International Monetary Fund |
| Language | : English |
| Release Date | : 21 June 1989 |
| ISBN | : 9781451970166 |
| Pages | : 48 pages |
The Purchasing Power Parity Criterion for Stabilizing Exchange Rates by International Monetary Fund Book PDF Summary
The use of purchasing power parity as a basis of fixing exchange rates among industrial countries, as proposed by McKinnon, is discussed and contrasted with alternative interpretations of the PPP doctrine. Major policy implications of such a regime are emphasized. Furthermore, a new technique for estimating PPP exchange rates which makes use of price pressure exerted by exchange deviation is introduced. This method is capable of solving the “base-year” problem more satisfactorily than the traditional Cassel-Keynes methodology. Estimated yen/dollar and mark/dollar PPP exchange rates are close to estimates derived using other methods.
