Exchange Rate Modelling in Ghana: Do the Purchasing Power Parity and Uncovered Interest Parity conditions hold jointly?

In 2011 the ongoing appreciation in the yen against the US$ led Japanese firm Shiomi to consider relocating its production facilities outside of Japan. As a prelude to making this decision, Shiomi commissioned an evaluation of the historical impact of the yen’s appreciation on Japanese competitiveness. This evaluation is the basis for two important lessons in international financial management. First, it is the real exchange rate, rather than the nominal exchange rate, that determines the relative cost competitiveness of countries. Second, in accordance with the rules of purchasing power parity, the historical evaluation showed that higher inflation in the U.S. relative to Japan caused the ratio of Japanese to U.S. prices to fall at roughly the same rate as the yen’s appreciation against the US$. Thus the long-term appreciation in the yen had little impact on Japanese competitiveness. Students are asked to assess the relocation decision in light of the post-case data on exchange rates and consumer prices supplied in the case. The case is appropriate for use in an international financial management or international economics course.

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ANALISIS PEMBENTUKAN UNI MONETER ASEAN-5 DENGAN PENDEKATAN PARITAS INTERNASIONAL DALAM HUBUNGAN KESEIMBANGAN NILAI TUKAR JANGKA PANJANG (1980.01 – 2004.12)

Jurnal Ekonomi Pembangunan Kajian Masalah Ekonomi dan Pembangunan ◽

10.23917/jep.v8i2.1037 ◽

2007 ◽

Vol 8 (2) ◽

pp. 128

Author(s):

Siti Aisyah Tri Rahayu ◽

Lukman Hakim

Keyword(s):

Purchasing Power Parity ◽

Market Integration ◽

Purchasing Power ◽

Power Parity ◽

Economic Market ◽

General Hypothesis ◽

Interest Parity ◽

Economic Union ◽

Parity Condition ◽

Existing Data

In order to strengthening cooperation regional and form the strength regional in ASEAN, likely require to relate at successful European Union in forming financial and economic market integration (EMU). ME become the “model" a success economic integration. We can conclude that to reach monetary union have to beforehand realized by economic union supported by union and strong politics willingness, where this matter have been blazed the way old in such a way by leaders of European countries of West which is merged into EMU. Intention of this research is to see the international parity condition of Purchasing Power Parity (PPP) and rate of interest parity (UIP) of among currency in ASEAN-5 with the currency of United States. Result of this research obtained is show that the goodness of theory of Purchasing Power Parity (PPP) and rate of interest parity (UIP) cannot be holded for the nations of ASEAN-5. In general, hypothesis ß 1=1 refused by existing data. This fact is indication that PPP and UIP cannot be holded during period 1980.01 until 2004.12. With do not hold of two the parity (PPP and UIP) hence possibility to existing of monetary uni ASEAN likely still will passing sufficient process.

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