Finding International Fisher effect to determine the exchange rate through the purchasing power parity theory: the case of Mexico during the period 1996-2012

Andrea SALAS Ortiz and Rodrigo GOMEZ Monge

Applied Econometrics and International Development, 2015, vol. 15, issue 1, 97-110

Abstract: Nowadays, the exchange rate is one of the most relevant issues of modern macroeconomics. Its importance is essential because of its impact on nominal and real variables. Our central question is whether the nominal interest differentials might be used to anticipate currency changes specially the Mexican-US exchange rate. So the purpose of this paper is to describe the theory of the international fisher effect and test its empirical validity for the Mexican case.

Keywords: Exchange rate; nominal interest rate; inflation rate; expectations. (search for similar items in EconPapers)
JEL-codes: E43 F31 F41 (search for similar items in EconPapers)
Date: 2015
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