Four way equivalence model: Difference between revisions
From ACT Wiki
Jump to navigationJump to search
imported>Doug Williamson m (Put See also links into same order as preceding list of related theories.) |
imported>Doug Williamson m (Link with qualifications page.) |
||
Line 20: | Line 20: | ||
== See also == | == See also == | ||
* [[CertFMM]] | |||
* [[Interest rate parity]] | * [[Interest rate parity]] | ||
* [[Fisher Effect]] | * [[Fisher Effect]] |
Revision as of 14:42, 1 November 2014
A model that proposes a number of related conceptual linkages between differences in:
(i) Interest rates;
(ii) Spot and forward foreign exchange rates;
(iii) Expected inflation rates; and
(iv) The expected change in spot foreign exchange rates.
The related individual linking theories are:
- Interest rate parity theory - linking interest rates & spot and forward foreign exchange rates.
- The Fisher Effect - linking interest rates with expected inflation rates.
- Expectations theory - forward foreign exchange rates and future out-turn spot foreign exchange rates.
- The International Fisher Effect - interest rate differentials and expected change in spot foreign exchange rates.
- Purchasing power parity theory - inflation rate differentials and expected change in spot foreign exchange rates.