Uncovered Interest Parity
This note provides an overview of the uncovered interest parity assumption. It traces the history of the interest parity concept, summarizes evidence on the empirical validity of uncovered interest parity, and discusses the implications for macroeconomic analysis. The uncovered interest parity assumption has been an important building block in multiperiod and continuous time models of open economies, and although its validity is strongly challenged by the empirical evidence, its retention in macroeconomic models is supported on pragmatic grounds, at least for the time being, by the lack of much empirical support for existing models of the exchange risk premium.
Year of publication: |
1991-05-01
|
---|---|
Authors: | Isard, Peter |
Institutions: | International Monetary Fund (IMF) |
Saved in:
freely available
Saved in favorites
Similar items by person
-
Exchange Rate Movements and Their Impact on Trade and Investment in the APEC Region
Ito, Takatoshi, (1996)
-
Inflation Targeting with NAIRU Uncertainty and Endogenous Policy Credibility
Isard, Peter, (2001)
-
The Role of MULTIMOD in the IMF's Policy Analysis
Isard, Peter, (2000)
- More ...